Preamble

The House met at a Quarter Past Two o' clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — MALAYA (COMPENSATION CLAIMS)

Captain Sir Peter Macdonald: asked the Secretary of State for the Colonies what arrangements have now been made to set up machinery to provide for the compensation of persons who have suffered personal loss of property and goods in Malaya as a result of the Japanese occupation.

The Secretary of State for the Colonies (Mr. George Hall): Arrangements are being made to set up a claims registration office in Malaya to register all claims against the civil authorities including those claims in respect of personal losses of property and goods, which have been provisionally registered in this country. I am not yet in a position to state the extent to which it may prove to be possible to award compensation in respect of such losses and accordingly registration must not be considered as committing the future Malayan Governments, when established, to the payment of compensation.

Squadron-Leader Donner: Is the right hon. Gentleman satisfied that these arrangements fully discharge all our moral obligations to these people, who have suffered and lost very greatly?

Mr. Hall: I am satisfied that we shall do our best.

Mr. McGovern: Will there also be registration of claims for loss of wages by those who have been rendered unemployed?

Captain Gammans: Have not the Malayan Government accepted all the obligations in this matter?

Mr. Hall: I am not sure that it is necessary to get a registration. I will make inquiries whether full recognition of all claims has been made and will let the hon. and gallant Member know.

Oral Answers to Questions — BRITISH NORTH BORNEO (ADMINISTRATION)

Squadron-Leader Donner: asked the Secretary of State for the Colonies whether he is in a position to make any detailed statement regarding the future status and constitution of British North Borneo.

Mr. George Hall: As I informed the hon. Member for the Scottish Universities (Sir J. Graham Kerr) on 17th October discussions, which are not yet concluded, are proceeding with representatives of the British North Borneo (Chartered) Company regarding the assumption by His Majesty's Government of direct responsibility for administration of North Borneo. I am not however able to make a detailed statement at present.

Squadron-Leader Donner: If I put down another question in a month's time, will the right hon. Gentleman be in a position to give an answer then?

Mr. Hall: I will do what I can. These negotiations, whilst they are friendly, are a little protracted, as my hon. and gallant Friend will appreciate.

Oral Answers to Questions — CYPRUS

Education

Mr. George Thomas: asked the Secretary of State for the Colonies the total number of children in Cyprus in 1938; the total number of children attending the schools of Cyprus; and whether formal education is compulsory in this Colony.

Mr. George Hall: The total child population of school age in Cyprus in 1938 was 75,800; the total number attending school in 1944 was 55,087. The free education given between the ages of 6 and 14 is not compulsory.

Mr. Thomas: While thanking the Minister for his reply, may I ask if he is prepared, in view of the splendid war record


of Cyprus and of the promises made during the war years to the Cypriots, to consider the introduction of a compulsory form of education in Cyprus, at least equal to the efforts we are now making for compulsory school education in Germany?

Mr. Hall: This matter is not quite easy, as I am sure my hon. Friend realises. It is constantly before the Colonial Office and the Cyprus Government.

Mr. Thomas: Can the Minister tell us what special difficulties are preventing compulsory education for the children of Cyprus?

Mr. Hall: The training of teachers and the erection of schools.

Sir Ronald Ross: Would the provision of education involve a charge on British funds or would it be paid for out of local funds?

Mr. Hall: There is a distribution of funds. The British Government, or shall I say the Government of Cyprus, are partly responsible and the local authorities are partly responsible.

Sir R. Ross: But mainly the British Government?

Trade Union Law

Mr. George Thomas: asked the Secretary of State for the Colonies whether it is under the Trade Union Law of 1941 that peaceful picketing is prohibited in Cyprus, or whether peaceful picketing has been prohibited in that Colony by any special Order since the passage of the law; and what is the present position.

Mr. George Hall: Under Section 50 of the Cyprus Trade Unions and Trade Disputes Law of 1941, peaceful picketing is lawful. The Section has not been amended since the passage of the law.

Oral Answers to Questions — PALESTINE

Armed Violence

Earl Winterton: asked the Secretary of State for the Colonies if he has now received a Report from the Government of Palestine in regard to the incidents on 10th October when a British member of the Palestine police force was murdered, Arab and Jewish members of the same force maltreated and a Christian refugee

suffocated; and if any arrests have been made in connection with that outrage.

Mr. George Halt: The Athlit Clearance Camp is in no sense a penal settlement but merely a staging post for immigrants, legal as well as illegal, and is largely staffed by nominees of the Jewish Agency for domestic, welfare and other duties. At the time of the attack, one Jewish police corporal and 12 Palestinian constables were on guard duty. It is not, and never has been, heavily guarded, and hitherto there has been no reason to suppose that the Jewish community in Palestine regarded persons inside the Camp as imprisoned. Persistent rumours had, however, been published by the Jewish Press in Palestine to the effect that a number of illegal immigrants in the camp were about to be deported. This story was completely unfounded. The police have been instructed to exercise great care and forbearance in the use of firearms, but this does not extend to prompt return of fire if they are attacked. No order has been issued of would be issued forbidding the police to use their arms in any circumstances. On the occasion of the ambush referred to in my reply on 11th October, the police immediately returned their assailants' fire. No arrests of the persons concerned in the attack have been made.

Mr. Stokes: May I ask the Colonial Secretary whether, in view of the instructions to the police, the order prevailing in Palestine with regard to the surrender of arms prior to the murder of Lord Moyne by the Jews, namely, that the Arabs should give up their arms and the Jews should not, has now been altered to an order that both sides must give up their arms?

Mr. Hall: That is another question.

Earl Winterton: May I ask the right hon. Gentleman whether, in view of the most serious allegations contained in a letter to me from a number of British members of the Palestine Police Force—all ex-Servicemen—to the effect that they have been prevented from using lethal weapons when their own lives were in danger from attacks by murderous mobs of Jews, he will look into the whole matter; and, if I put down a Question in a fortnight's time, will he give an answer, so as to avoid my raising it on the Adjournment, in view of the delicacy of the situation?

Mr. Hall: The right hon. Gentleman was good enough to send me the letter referred to just an hour or so before I came into the House. I received it at 12 o'clock to-day. The letter contains very serious charges, and I shall certainly take up the matter with the High Commissioner of Palestine and get his comments upon it.

Mr. Gallacher: Is it not very undesirable, Mr. Speaker, that a Member, on the basis of a personal letter, should try to arouse serious anti-Jewish prejudice?

Earl Winterton: I would like to raise a point of Order, and to ask for the protection of the Chair against the charge made by the hon. Gentleman opposite. The letter reached me in a perfectly proper way. I did not say whether or not I made myself responsible for the allegations. It was sent to me by eight members of the Palestine Police Force.

Mr. Gallacher: Further to that point of Order, I would say that everyone knows that there is a very serious situation in Palestine and much violence has been displayed, but I would ask you, Sir, whether an hon. Member—[Interruption].

Mr. Speaker: The noble Lord has asked me a question on a point of Order and all I can say is, that he is perfectly in Order in sending on the letter to the right hon. Gentleman and asking him a question upon it. The hon. Member for West Fife (Mr. Gallacher) should try to restrain himself.

Mr. Gallacher: Further to that point of Order—

Mr. Speaker: We have now finished with the matter.

Mufti of Jerusalem

Captain Gammans: asked the Secretary of State for the Colonies if he has any information as to the whereabouts of the ex-Mufti of Jerusalem; and if the ex-Mufti is to be treated as a traitor or a war criminal.

Squadron-Leader Segal: asked the Secretary of State for the Colonies what investigations he is making to ascertain the present whereabouts of the Grand Mufti of Jerusalem; and whether His Majesty's Government still has any intention of bringing him to trial as a war criminal.

Mr. George Hall: The Mufti of Jerusalem is in the hands of the French authorities. As regards the second part of the Question, I have no statement to make at present.

Captain Gammans: Would the right hon. Gentleman say how he got into the hands of the French authorities and where he came from?

Mr. Hall: No, Sir; not without notice.

Squadron-Leader Segal: In view of the Colonial Secretary's investigation into the allegation that British troops were instructed to hold their fire against refugees who happened to be Jews, are we to understand that they will be instructed to hold their fire against war criminals who happen to be Moslems?

Mr. Hall: That is an entirely different question.

Miss Rathbone: In view of the fact that these activities are mostly carried on in Palestine, could not representations be made to the French to give up the ex-Mufti, so that he could be tried as a war criminal?

Mr. Hall: That is a question which should be put to my right hon. Friend the Foreign Secretary.

Illegal Weapons

Mr. Lipson: asked the Secretary of State for the Colonies if he can make a statement about the extent to which military weapons are held by unauthorised persons in Palestine; and the steps he is taking to secure their surrender.

Mr. George Hall: I regret to say that there is a large number of unauthorised persons in possession of arms in Palestine. I do not think that it would be in the interests of public security in Palestine to reply to the last part of the Question.

Mr. Lipson: Can my right hon. Friend give us an assurance that he is taking all possible steps to obtain possession of these arms so as to prevent any unnecessary bloodshed in the future, and can he say whether his efforts up to now have met with any reasonable success?

Mr. Hall: This is a very difficult and delicate question with which the Government of Palestine are faced, but I am sure that they are taking what steps they can to obtain surrender of these arms.

Mr. Stokes: Will my right hon. Friend now say whether a direct request has been made to both sides to lay down and hand over their arms?

Mr. Hall: I could not give a categorical reply now, but I will look into the matter and let my hon. Friend know.

Mr. Sorensen: Could the Minister say how these arms are acquired?

Mr. Sydney Silverman: Can my right hon. Friend say whether it is true that some of the arms were acquired at a time when disturbances in Palestine were very great and when the British authorities, who were unable to protect the Jewish community there, granted and themselves provided the Jewish settlements with arms for their own self-protection?

Oral Answers to Questions — COLONIAL EMPIRE

Colonial Office Appointments (ex-Servicemen)

Lieut.-Colonel Martin Lindsay: asked the Secretary of State for the Colonies what special consideration his Department is giving to ex-Servicemen in filling appointments under the Colonial Office.

Mr. George Hall: Arrangements were made in the early part of the year for information about appointments in the Colonial Service to be made available to Servicemen in all parts of the world, through Service channels. This material was released simultaneously in all Commands on 1st June. In several classes of appointment—indeed wherever possible—war experience in the Forces is being accepted in lieu of the educational qualifications normally required before the war. Branches of the Colonial Office have been opened in Delhi and Cairo to deal with applications from Servicemen in those areas, and representatives of the Director of Recruitment have visited, or will visit, Southern India, Malaya, East and West Africa, and several other areas to interview candidates.

Lieut.-Colonel Lindsay: While thanking the right hon. Gentleman for that reply, may I ask him to bear in mind the particular difficulties of young ex-officers, with good records but no special qualifications, in obtaining jobs commensurate with their war-time responsibilities; and may I ask that they should be given special consideration, in view of their

particular suitability for certain types of administrative posts under the Colonial Office?

Mr. Hall: I can assure the hon. and gallant Member that these matters are sympathetically considered.

Mr. Sorensen: May I ask the right hon. Gentleman whether, while bearing that in mind, he will see that that principle is in no way detrimental to the applications of Africans who are also suitable for these posts?

Lieut.-Commander Gurney Braithwaite: Is the right hon. Gentleman keeping contact in this matter with the Appointments Department of the Ministry of Labour, which probably has some suitable names, on the lines suggested by my hon. and gallant Friend?

Mr. Hall: We are in touch with any organisation which can assist in producing the right people.

Mr. Kirkwood: May I ask the Minister not to pay special attention to ex-officers any more than to the rank and file?

Mr. Hall: I would like to assure my hon. Friend that, whatever the position or rank of the applicant, all applications receive sympathetic consideration.

Income Tax

Major Conant: asked the Secretary of State for the Colonies in what Colonies and Dependencies is Income Tax still not yet levied.

Mr. George Hall: The Colonies and Dependencies under civil administration in which Income Tax is not levied are Bahamas, Bermuda, Gibraltar, Malta, St. Helena, and the Turks and Caicos Islands Dependency of Jamaica.

Major Conant: While thanking the right hon. Gentleman for that reply, may I ask him if he can say why a proposal for Income Tax in the Seychelles has been abandoned in favour of an export tax?

Mr. Hall: That I could not say, but if the hon. and gallant Member will put that Question down, I will look into it and give him a reply.

British Films

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for the Colonies the post-war policy of his


Department in regard to the provision, distribution and exhibition of British films in the Colonies, especially those designed to give information in the British way of life.

26. Mr. Reeves: asked the Secretary of State for the Colonies whether it is proposed continuing the Colonial Film Unit now that the war has terminated, and if so, what are its functions to be

Mr. George Hall: Yes, Sir. Present arrangements for the supply of films to the Colonies include films made by the Colonial Film Unit of the Ministry of Information, British Council documentary films and a special news reel sent weekly by air to Colonial Territories. These films include a substantial proportion of material illustrating the British way of life. The Colonial Film Unit also produces films on educational and social subjects. It is my intention to maintain and expand these arrangements to ensure a vigorous presentation of the British case in the Colonies. Precise details of administration and finance are under consideration at present in connection with the future of Government publicity as a whole.

Sir T. Moore: While thanking the right hon. Gentleman for that very informative and very satisfactory reply, may I ask if he is aware that there is a growing and very natural demand amongst Colonial peoples to learn more about this great and victorious people in Britain; and will he consult, not alone the British Council, but the British film industry on the means by which this information can be given?

Mr. Hall: I shall be prepared to meet the hon. and gallant Member and discuss the matter.

Mr. Reeves: In view of the nature of these films, could not the right hon. Gentleman make arrangements for hon. Members of this House to see them from time to time?

Mr. Hall: I will certainly consider that.

Sir Wavell Wakefield: Could the right hon. Gentleman take similar steps to make more widely known in this country what is happening in the Colonies? There is a great desire in this country for more knowledge of what is taking place in the Colonies, and will he tell the House what steps he is taking in that direction?

Mr. Hall: We are certainly endeavouring to do that. There is now in course of preparation, what I hope will be a very good film, which I hope will be very well received.

Mr. Gallacher: Is the right hon. Gentleman aware that the film industry generally depicts the British way of life as the life of a Tory squire, and will he see that the British way of life is better depicted than that?

Hon. Members: Nonsense.

Mr. McGovern: Will the Minister also see that a film is exhibited showing the dead bodies of Indians who were starved to death in Calcutta last year?

Co-operative Movement

Mr. H. Hynd: asked the Secretary of State for the Colonies, what are his plans for the development of the co-operative movement in the Colonies; and whether he will consider the setting up of a co-operative department in his Department and in each of the Colonies, manned by trained staff.

Mr. George Hall: Co-operative departments and registrars of co-operative societies already exist in several Colonies and I will consider whether these Colonies in which special officers or departments do not exist should be invited to consider their appointment. It is proposed to pay special attention to the important subject of recruitment and training of staff for co-operative work. At the present moment, however, the extreme staff shortage in the Colonies is an obstacle. Up to the present it has not been felt that the establishment of a separate co-operative department in the Colonial Office would materially assist the growth of co-operation in the Colonies. I propose to circulate to Colonial Governments a model draft cooperative ordinance.

Squadron-Leader Donner: Can the right hon. Gentleman give an assurance that co-operative societies of producers will be encouraged?

Mr. Hall: Certainly, Sir.

Annual Reports and Economic Survey (Re-issue)

Mr. Sorensen: asked the Secretary of State for the Colonies what are his plans regarding the re-issue of annual reports on the Colonies and the annual Colonial Economic Survey.

Mr. George Hall: I intend that these reports should be resumed at the earliest practicable moment, but in view of present staffing difficulties in the Colonies and in my Department I cannot yet say how soon this is likely to be.

Public Development Corporations

Major Wilkes: asked the Secretary of State for the Colonies if there are any plans for raising the standard of living in the Colonies by the creation of public development corporations.

Mr. George Hall: It has been suggested to Colonial Governments that they should consider the use of public development corporations in the general task of promoting Colonial economic development. I am going further into the possibilities, but no precise plans have yet been made.

Higher Education (Reports)

Major Wilkes: asked the Secretary of State for the Colonies what action his Department is proposing to take on the three Reports on Higher Education in the Colonies recently published.

Mr. George Hall: I have already commended to the favourable consideration of Colonial Governments and institutions of higher education the Report of the Commission on Higher Education in the Colonies together with the Report of the West Indies Committee of that Commission. I hope that I shall soon be able to announce the establishment of the Inter-University Council recommended by the Commission. Other parts of the Report are under close consideration. The West Indian Governments have been informed that if the Committee's recommendations for the establishment of a West Indian university are acceptable to them, I shall be prepared to give favourable consideration to a grant for this purpose under the Colonial Development and Welfare Act. As regards the Reports of the Commission on Higher Education in West Africa I would refer to the reply I have just given to the hon. Member for Thirsk and Malton (Mr. Turton).

Oral Answers to Questions — KENYA (LOAN)

Major Conant: asked the Secretary of State for the Colonies what is the amount of the three per cent. loan which the

Kenya Government recently proposed to raise by local subscription; and whether the amount has been fully subscribed.

Mr. George Hall: The total amount of the loan is £600,000, which has been fully subscribed.

Oral Answers to Questions — EAST AFRICA

Administrative Co-operation

Colonel Ponsonby: asked the Secretary of State for the Colonies whether in view of the proposed co-ordination in West Africa, he will make any statement about closer co-operation between the East African Dependencies.

Mr. George Hall: I am aware of the important and complex issues involved in the future of the East African Governors' Conference and the other organisations which have been associated with it during the war. I am not, however, at the present moment in a position to make a statement about future policy on this question.

Colonel Ponsonby: As the right hon. Gentleman has mentioned the Governors' Conference, will he bear in mind that this has for 15 years: been regarded as a futile body, by officials, non-officials, most of the Governors and certainly by one Secretary of State?

Mr. Hall: That is one of the matters which I am at present discussing with the Governor of Kenya, who is now in this country.

Tanganyika and Uganda (Prospecting Licences)

Mr. Sorensen: asked the Secretary of State for the Colonies what is the position in respect of granting licences for mine prospecting in Tanganyika and Uganda; and whether small prospectors have equal opportunities with the larger companies.

Mr. George Hall: There is no discrimination in the granting of initial prospecting rights in Tanganyika and Uganda, which are valid for one year. Thereafter the holder may be granted an exclusive prospecting licence, but he must first satisfy the Government that he has sufficient capital to ensure the proper prospecting of the area in question and the payment of any compensation which may be due to the owners and occupiers of the land for the disturbance of surface rights and damage to crops, etc.

Squadron-Leader Donner: Would the Colonial Secretary give close attention to the appeal inherent in this Question on behalf of private enterprise?

Mr. Sorensen: Can the Colonial Secretary give any idea of the number of small prospectors who have had licences granted to them?

Mr. Hall: No, Sir. If my hon. Friend will put the Question down, I will see whether I can give him the information.

Oral Answers to Questions — WEST AFRICA (HIGHER EDUCATION REPORT)

Mr. Turton: asked the Secretary of State for the Colonies whether he is now in a position to state what action he proposes to take in order to implement the Report on Higher Education in West Africa.

Mr. George Hall: I am in consultation with the Governors of the West African Colonies by whom the reports of the Commission on Higher Education in West Africa are now being studied. Owing to the difficult and complicated issues involved, it is not at present possible for me to say when final decision will be reached.

Mr. Turton: As the Parliamentary Secretary was a member of this Commission, is it necessary to wait for three months before reaching a decision?

Mr. Hall: It is not a question of who were members of the Commission, but of getting the opinions of the Governors who have to administer this scheme.

Mr. Kenneth Lindsay: Is it proposed to make any statement before Christmas?

Mr. Hall: It depends on when we get the views of the Governors upon these Reports.

Oral Answers to Questions — AFRICAN COLONIES

Motor-cars and Bicycles (Import Duty)

Mr. Turton: asked the Secretary of State for the Colonies whether, with a view to improving transport facilities and reducing the cost of transport, he will ask Colonial Governments in Africa to consider the admission of motor-cars and bicycles free of import duty.

Mr. George Hall: The hon. Member will remember that he raised this matter in a supplementary question on the 21st June, 1944, and the matter was then taken up with the Governors of the Colonies concerned. As a result, assurances have been received from the African Colonies that this matter will be borne in mind on the next opportunity of reviewing general taxation. The Gold Coast already admits all motor cars and bicycles, and Sierra Leone admits British motor cars and bicycles, free of duty.

Mr. Turton: Will the Colonial Secretary pursue the encouragement to the Colonial Governors, as it is in the interests both of the Colonies and of our own export trade?

Mr. Hall: It is not, of course, a matter entirely in the hands of the Colonial Secretary; the Colonies themselves must be consulted in taking a decision.

Mr. Evelyn Walkden: But is the right hon. Gentleman not aware that certain firms and industrialists from Birmingham who have settled recently in South Africa are agitating for increased tariffs to keep out British goods?

Native Administrations

Lieut.-Colonel Wheatley: asked the Secretary of State for the Colonies whether he is satisfied that there is sufficient provision in African Colonies, where the system of indirect rule prevails, for the adequate representation of educated Africans on native councils.

Mr. George Hall: It has long been and still is the policy of African Governments to encourage native administrations to include increasing numbers of educated men on their councils and staffs. Progress has been made in both West and East Africa, but the process must go much further if native administrations are to take their proper share in promoting the social, economic and political development of the African territories. The Governments concerned can be assured of my full support in their efforts to secure increasing participation by educated Africans in the system of indirect rule.

Lieut.-Colonel Wheatley: Will the Minister see that the products of the small local schools are given an equal chance and are not frowned upon when they want to join these native councils?

Mr. Hall: We are doing what we can in this matter.

Oral Answers to Questions — NYASALAND (NYIKA PLATEAU, SETTLEMENT)

Colonel Ponsonby: asked the Secretary of State for the Colonies whether the possibility of non-native settlement in the Nyika Plateau of Nyasaland has been examined; and, if so, with what result.

Mr. George Hall: I have asked the Governor for a report on this subject, and I shall communicate with the hon. and gallant Member when I receive it.

Sir W. Wakefield: Is the right hon. Gentleman aware that the natives in that part of Nyasaland most urgently want European settlement there? Views to that effect were expressed to a recent Parliamentary delegation who visited that part of the country.

Mr. Hall: I must await the report from the Governor.

Oral Answers to Questions — NIGERIA ("NATIONAL COUNCIL")

Mr. Turton: asked the Secretary of State for the Colonies what are the relations between his Department and the body known as the "National Council of Nigeria"; and if he will inform the House of the status, composition, strength and aims of this body.

Mr. George Hall: The only relations which the Colonial Office have had with the National Council of Nigeria are that certain communications from the council have been forwarded to me by the Governor. I understand that the council is not a representative body, but consists of a few Africans prominent in the political life of Lagos, and a number of associations mainly composed of members of various tribes who are now living in Lagos, and who are not in close touch with the views of the people in the areas from which they come. The declared aims of the council are to promote political freedom, economic security, social equality and religious toleration.

Mr. Turton: In view of the very exaggerated reports that have circulated, especially in America, regarding this body, will the right hon. Gentleman give due prominence to the facts regarding its composition?

Mr. Hall: I think the reply which has just been given will be sufficient.

Oral Answers to Questions — MALTA

Infant Mortality

Mr. Henry Hynd: asked the Secretary of State for the Colonies what is the infant mortality in Malta, and if he can make any statement on the milk supply in that island.

Mr. George Hall: As the reply is rather long and contains a number of detailed figures, I will, with my hon. Friend's permission, circulate it in the Official Report.

Mr. Hynd: Can the Minister say whether the reply contains the plans of his Department to improve that situation?

Mr. Hall: I would ask my hon. Friend to wait and see the reply and then, if he is not satisfied, I can have a word with him.

Following is the detailed reply:

The infant mortality rate in Malta which rose during the first years of the war to the maximum figure of 345 per thousand in 1942 declined sharply last year to 116 per thousand, a rate substantially lower than that of the best pre-war year, 1936, when it stood at 190. The rate up to the end of September this year is 154, higher than last year, but again considerably lower than 1936. The lower rate of 1944 is attributed to the fact that there was a substantial increase in the birth rate that year with a large number of first babies who tend to receive more care and attention from their mothers than do their successors.

With regard to the milk supply I take it that the hon. Gentleman's interest in it is connected with the first half of his Question: that is, the milk supply to babies and young children. Tinned evaporated milk is reserved exclusively for babies and is rationed on the scale of 16 tins a month from birth to four months,20 tins a month from four to 12 months and 12 tins a month from 13 to 18 months. Full cream milk powder is rationed to children from 19 months to five years at the rate of 2 lb. per child per month and to all children between five and 14 registered with the Child Welfare Scheme—some 10,000—at the rate of half a pint a day. The general public is also permitted to buy half a pound of powdered milk a day, the total


daily issue to this category of consumer being, however, limited to half a ton a day. In addition to the ration about 1,430 gallons of pasteurised milk a day and 5,500 gallons of raw milk are on the open market.

Constitution (Inquiry)

Mr. Berry: asked the Prime Minister whether, in view of the promise made in 1943 to restore responsible government to Malta, he will consider the appointment of a Royal Commission to visit that island in the near future to report as quickly as possible on the financial, economic and war damage position, with a view to an early restoration of self-government.

The Prime Minister (Mr. Attlee): No, Sir. A very full and comprehensive inquiry into the financial, economic and war damage position in Malta has recently been made on behalf of my right hon. Friend the Secretary of State for the Colonies. It is the intention of His Majesty's Government shortly to appoint a commissioner to visit Malta and to discuss the formulation of detailed proposals regarding the new constitution and any other matters bearing on the grant of responsible government, and the findings of the inquiry will, of course, be available to him. In these circumstances, it is the opinion of His Majesty's Government that the appointment of a Royal Commission is not only unneccessary, but might further delay the restoration of responsible self-government in Malta.

Mr. Berry: Is the right hon. Gentleman aware that the appointment of a Royal Commission would be received with much greater pleasure in Malta than the appointment of a single commissioner, who would be regarded merely as an expert?

The Prime Minister: I disagree. We want to get on with the job there, and not wait for a Royal Commission, which sometimes takes a very long time.

Oral Answers to Questions — WEST INDIES

Air Services

Sir P. Macdonald: asked the Secretary of State for the Colonies how many aircraft the British West Indian Airways operate; and what are the possibilities of

extending this service to other West Indian islands.

Mr. George Hall: British West Indian Airways at present operate five aircraft. The company is now operating air services to Trinidad, Barbados, British Guiana, Grenada, St. Lucia, St. Kitts and Jamaica. Their services to Antigua and St. Vincent have been temporarily discontinued owing to difficulties in regard to the airfield there. The extension of the company's service is under consideration and it is hoped to arrange this as soon as the necessary facilities are available, and the necessary arrangements can be made.

Sir P. Macdonald: Is it not a fact that these planes are very unsatisfactory; and will the right hon. Gentleman take steps at the earliest possible moment to see that other machines are available?

Mr. Hall: We have had no complaints of that matter.

Colonel Oliver Stanley: Did the Minister say that he has had no complaints about the Hudsons which are now being operated by that company?

Mr. Hall: I know of no complaints; I shall certainly make inquiries.

Sir P. Macdonald: But the chairman of this company has been over here for weeks trying to see the right hon. Gentleman on this matter.

Mr. Hall: He has made no application to me; otherwise I would have seen him.

Federation Proposals

Major Wilkes: asked the Secretary of State for the Colonies whether he will report on the reactions of the West Indian Legislatures to the proposals for West Indian federation.

Mr. George Hall: I have so far only received reports of the Debates in the Legislatures of three of the Colonies concerned on this subject. In the Bahamas the Legislature was of the unanimous opinion that the Colony should not, at present, participate in any proposed federation. The Legislative Council of British Honduras have passed a resolution stating that they would view with favour the consideration of any measure for the political federation of British Honduras with the British West Indies Colonies, subject to


certain conditions. The Trinidad Legislative Council have passed a resolution in favour of the aim of federation and have recommended that the Council should appoint a Committee to consider the immediate steps to be taken to stimulate the movement of West Indian affairs in the direction of federation.

Major Wilkes: In order to prevent this being put off, would the Minister consider making a time limit by which Legislatures should definitely give their opinions on this vitally important matter for the whole of the West Indies?

Mr. Hall: It is difficult to make a time limit; it must be left to the Legislative Councils on the spot.

Oral Answers to Questions — BRITISH HONDURAS

Hurricane Damage

Sir P. Macdonald: asked the Secretary of State for the Colonies if he has any report to make on the recent hurricane in British Honduras; what is the extent of the damage; and what has been done to assist those who have suffered in this connection.

Mr. George Hall: I regret to state that there have been two recent hurricanes in British Honduras. The first struck Belize on 31st August. It caused five deaths, and serious damage to agricultural crops. A further severe hurricane struck the southern part of the Colony on 4th October. It destroyed some 80 per cent. of the town of Punta Gorda and caused extensive damage to agricultural crops and to property, though I am glad to say that only one death was caused. A sum of money has been made available for the immediate relief of farmers in the Belize district and an appeal has been made to the public for subscriptions to a relief fund. No estimate is yet available of the sum which will be required for the relief of distress in the southern part of the Colony damaged in the second hurricane, but measures have been taken for immediate relief and for temporary housing and the position is well in hand. I am in communication with the Governor as to whether any further assistance is required.

Oral Answers to Questions — SIERRA LEONE (MUNICIPAL ORDINANCE, FREETOWN)

Mr. Sorensen: asked the Secretary of State for the Colonies what is the position respecting the granting of a new municipal ordinance in Freetown.

Mr. George Hall: An ordinance was enacted in June designed to give the city council of Freetown greater control over municipal affairs on a more democratic basis. The nature of this legislation has been widely misrepresented and misunderstood, and as a result of an intensive campaign the registration of voters under the new ordinance was almost completely boycotted. It has therefore become necessary to amend this ordinance so as to postpone its coming into effect until a date to be notified by the Governor, thus automatically continuing the life of the existing ordinance for the time being.

Mr. Sorensen: May I ask whether this misunderstanding, in the estimation of the right hon. Gentleman, was deliberate or accidental; and if deliberate, can he say how it is there has been this agitation?

Mr. Hall: I would not like to say it is deliberate but it is a misunderstanding which ought to be cleared up.

Mr. Sorensen: Would the right hon. Gentleman take every possible action to see that it is cleared up, because I understand there is some disturbance over there as a consequence of this ordinance?

Mr. Hall: We have done what is possible, but I will consider the suggestion.

Oral Answers to Questions — POLAND

Homeless and Orphan Children

Mr. Henderson Stewart: asked the Secretary of State for Foreign Affairs if he is aware of the large numbers of homeless children and orphans in Poland, and the desire on the part of many citizens of Great Britain to offer them temporary hospitality; if he has any estimate of the numbers of such children; what action is being taken by the United Nations to care for them; and what facilities are available for their passage to this country.

The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): I have no information of the number of homeless children and orphans in Poland, nor have


I at the moment the means of obtaining it. The problem of Poland is one for U.N.R.R.A., to which His Majesty's Government contributes, and the Polish Provisional Government.

Mr. Stewart: In view of the great numbers of these wretched children, can the Minister indicate whether the British representatives on U.N.R.R.A. are taking appropriate measures?

Mr. Bevin: U.N.R.R.A. is endeavouring to do its job, but I would remind the hon. Gentleman that the position of distressed children and grown-ups in Europe is one of the greatest tragedies of the ages.

Mr. Kenneth Lindsay: Could the Minister say, irrespective of political considerations, whether he is satisfied that U.N.R.R.A. or any other body is dealing at all adequately with this problem of children in Europe, especially in Poland and East of Berlin?

Mr. Bevin: With the political situation in Europe as it is I do not think it is possible to devise any organisation which is capable of grappling with it.

Mr. Peter Freeman: Could the Minister say whether he will provide facilities for individual children to be brought over to this country?

Mr. Bevin: That is tremendously difficult. If you start opening the door to one particular individual, there are so many millions in the same position that I think it would be a formidable task to grapple with it by that means.

Conditions

Colonel Gomme-Duncan: asked the Secretary of State for Foreign Affairs, if, in view of the widespread anxiety as to the conditions in Poland generally and the treatment of Polish subjects on both sides of the Curzon Line, he will publish the latest official reports he has received and make a full statement on the subject at an early date.

Mr. Bevin: I am watching the development of the situation in Poland very closely. I do not, however, at present see any justification for departing from the normal practice of not publishing the confidential reports which I receive regularly from His Majesty's Ambassador at Warsaw. Moreover, I cannot meantime promise an early statement on the subject.

Captain Gammans: Can the right hon. Gentleman say if Allied or neutral journalists are at present allowed to go to Poland?

Mr. Bevin: That does not arise out of this Question.

Vice-Admiral Taylor: Will the Minister take into account the mass arrests, reported in the papers, of thousands of Poles, during the last few days?

Oral Answers to Questions — BRITISH AUTHORS' COPYRIGHT, LATIN AMERICA

Mr. E. P. Smith: asked the Secretary of State for Foreign Affairs what protection in the matter of copyright is afforded to British authors in the countries of Latin America; which of these adhere to the Berne Convention; and what steps he proposes to take to safeguard and increase the export of British cultural work to this area.

Mr. Bevin: None of the Latin American countries, except Brazil, is a party to any Copyright Convention of which this country is a signatory. The Berne Convention of 1886 was revised by the Berlin Convention of 1908 and by the Rome Convention of 1928, to both of which Brazil adhered with effect from February, 1922, and June, 1933, respectively. I understand, however, that as a general rule British authors can obtain protection in Latin American countries by complying with the relevant local laws and requirements.

Mr. Smith: Will the right hon. Gentleman undertake to exercise his great gifts for negotiation so that British authors will get rather a better deal in that area?

Mr. Bevin: It depends on the author, I think.

Oral Answers to Questions — SUDAN (ANGLO-EGYPTIAN TREATY)

Squadron-Leader Segal: asked the. Secretary of State for Foreign Affairs what changes are contemplated in the future status of the Anglo-Egyptian Sudan; and whether any reply has yet been tendered by His Majesty's Government to the recent representations of the Egyptian Government for its annexation to Egypt.

Mr. Bevin: The status of the Sudan is governed by the Anglo-Egyptian Treaty of 1936, and I have nothing to add at


present to my reply of 22nd August to the hon. and gallant Member for Basingstoke (Squadron-Leader Donner) concerning the question of the revision of that instrument.

Squadron-Leader Segal: In view of the fact that there are more urgent problems in Central Europe, would the right hon. Gentleman urge upon the Egyptian Government, as the leading country in the Arab League and one of the fortunate countries in the war, not to press unduly their request for revision of adjacent territories in the present state of world affairs?

Mr. Bevin: I have received no formal representation on the matter, and I do not propose to invite it.

Oral Answers to Questions — RASHID ALI GAILANI

Squadron-Leader Segal: asked the Secretary of State for Foreign Affairs by what means Rashid Ali Gailani was able to find asylum in Saudi Arabia; who assisted him to escape from Europe; and what steps His Majesty's Government propose to take to prevent his further evasion of trial as a war criminal.

Mr. Bevin: Rashid Ali is reported to have travelled after the defeat of Germany from Austria to Brussels, Paris, Marseilles, thence by sea to Beirut, and on by land to Saudi Arabia. Steps are being taken to check this information and to ascertain who assisted Rashid Ali to reach the Near East. Rashid Ali is not listed as a war criminal; but he is a traitor to Iraq, and has been condemned to death in absentia by an Iraqi tribunal. His Majesty's Government are satisfied that Rashid Ali entered Saudi Arabia without either the permission or the previous knowledge of the Saudi Arabian Government. They are discussing with the Saudi Arabian Government the future of this rebel.

Squadron-Leader Segal: Is there not a very real danger that if this arch-criminal is able to evade justice, it might be interpreted as a sign of weakness on the part of the British Government, and act as a direct incentive to further revolt in those areas, with a consequent risk of loss of British lives?

Mr. Bevin: I have not the slightest fear of further revolt in that area.

Oral Answers to Questions — UNITED NATIONS' ORGANISATION (RADIO LUXEMBOURG)

Major Symonds: asked the Secretary of State for Foreign Affairs if he has any further statement to make with regard to the proposal to use Radio Luxembourg as an international broadcasting station on behalf of the United Nations Organisation.

Mr. Bevin: No, Sir.

Oral Answers to Questions — GERMAN POLITICAL REFUGEES, GREAT BRITAIN

Lieutenant Herbert Hughes: asked the Secretary of State for Foreign Affairs how many German political refugees from the Nazi régime now in this country have expressed their wish to return to Germany; whether any permits have been granted to enable them to do so; and, if not, whether he will consider facilitating the return of such people at an early date.

Mr. Bevin: Applications have been made to several Departments of His Majesty's Government, and I fear I cannot give the exact figure, but I doubt if it would exceed a thousand. Permission to return to Germany has hitherto been withheld, largely because of the extreme shortage of transport, food and shelter in that country. But the matter is under active consideration, and I hope that refugees may be able, before long, to begin to return on a small scale.

Mr. Vernon Bartlett: Will the right hon. Gentleman bear in mind the very urgent need in Germany for officials of the people, who would take responsibility, and who really are anti-Nazi?

Mr. Bevin: I have got that in mind. On the other hand, I must ask the hon. Member to appreciate the tremendous difficulties of the Control Commission, owing to lack of transport and shelter.

Oral Answers to Questions — AUSTRIA

Refugees

Mr. Peter Freeman: asked the Secretary of State for Foreign Affairs if he is yet in a position to state whether facilities can be made to enable Austrian refugees, who wish to do so, to return to their own country to assist in its revival and reconstruction.

Mr. Bevin: I would refer my hon. Friend to the reply given to the hon. Member for Moseley (Mr. Woods) on 22nd October.

Mr. Freeman: Can the right hon. Gentleman say whether in the case of builders and engineers who can help to resurrect their country, he will provide special facilities?

Mr. Bevin: There are many other difficulties. It is not quite so simple as that. If there are builders and engineers available, I promise to employ them here, in the meantime, to help us, if they want to render help in reconstruction.

Rehabilitation

Sir T. Moore: asked the Chancellor of the Duchy of Lancaster if he will give the House any information in regard to the progress of rehabilitation in Austria.

Mr. Anthony Nutting: asked the Chancellor of the Duchy of Lancaster what steps are being taken by the Allied Powers concerned for the rebuilding of Austria's economic position.

The Chancellor of the Duchy of Lancaster (Mr. John Hynd): The rebuilding of Austrian economy must start with the provision of the basic essentials, food, fuel and transport. Unfortunately food, fuel and transport shortages form a vicious circle which frankly it will be difficult to break. Our authorities in Austria and those of our Allies, assisted by Doctor Renner's Government, whose authority now extends to the whole of Austria, are making the most strenuous efforts to remedy shortages. But the difficulties which confront them, particularly as regards food, remain formidable and reach far beyond the confines of Austria. In other fields good progress is being made towards rehabilitation, with the re-establishment of sound legal and educational systems, the organisation of hospital services and the formation of a cadre of a new Civil Service and of a reliable police force.

Mr. Nutting: In order to make a reality of the Moscow Declaration on the future of Austrian independence, and to make that independence economic as well as political, will the hon. Gentleman urge the Russian Government to stop creating con-

ditions of inflation in Austria, and to stop stripping the country bare of plant and machinery, and so contribute themselves to the recovery of Austrian economy?

Mr. Hynd: The question of possible inflation in Austria and the other question raised by the hon. Member should be put on the Order Paper, addressed to the Foreign Secretary.

Sir T. Moore: I cannot accept that. I put my Question to the Foreign Secretary and it was transferred, without my agreement, to the hon. Gentleman who has just replied.

Mr. Hynd: The terms of the Question by the hon. and gallant Member which appeared on the Order Paper did not raise the questions that have been raised in the supplementary question. Those are matters that are being discussed on the higher level, and therefore, should appropriately be put to the Foreign Secretary.

Sir T. Moore: That really means nothing. I put my Question to the Foreign Secretary, and the Foreign Office transferred it without my agreement to the hon. Gentleman who has just replied. It is therefore no use for him to "pass the buck" back and say that I should put down the Question to the Foreign Secretary. I want to know, in view of this specific undertaking which has been referred to, and which was given by the late Prime Minister after the Moscow Conference, whether the Government think that the present system of zoning in Austria is likely to lead to the late Prime Minister's undertaking being implemented?

Mr. Hynd: The hon. and gallant Member has now raised the whole issue. The question of the zoning arrangements and the question of the quadripartite machinery are, obviously, not matters of internal administration within our zone, and therefore matters which, if the hon. and gallant Member desires to challenge the policy, should be submitted to the Foreign Secretary.

Mr. Nutting: If the Chancellor of the Duchy cannot give an answer, is the Foreign Secretary in a position to answer my Question now? Otherwise, I will put a question down.

Oral Answers to Questions — GERMANS (EXPULSION FROM EAST EUROPE)

Colonel Gomme-Duncan: asked the Secretary of State for Foreign Affairs if he can give any further information regarding the proposed expulsion of Germans from Eastern Europe which was to begin on 15th October, 1945.

Mr. Bevin: I presume that the hon. and gallant Member is referring to reports which have appeared in the Press of an agreement between Marshal Zhukov and the Polish, Czechoslovak and Hungarian Governments for the transfer to Germany of 4,500,000 Germans from Poland, Czechoslovakia and Hungary. His Majesty's Government have no knowledge of such an agreement, and so far as can be ascertained the report is without foundation.

Mr. Stokes: May I ask the right hon. Gentleman whether, in view of the very substantial reports which have been published on this matter. His Majesty's Government have made any representations to the Soviet Government that these deportations or expulsions should be stopped?

Mr. Bevin: That does not arise out of this Question.

Oral Answers to Questions — TARIFF LEGISLATION (GOVERNMENT POLICY)

Mr. Hopkin Morris: asked the Prime Minister if he proposes to introduce legislation to repeal the Import Duties Act, 1932, and the Ottawa Agreements Act.

The Prime Minister: I am not yet in a position to announce the intentions of His Majesty's Government as to the future of the existing tariff legislation.

Oral Answers to Questions — R.A.F. FLYING INSTRUCTORS (AWARDS)

Sir W. Wakefield: asked the Prime Minister whether he is aware that many R.A.F. pilots were kept on flying instructors' duties in spite of personal preferences for operational duties; and whether he will consider the award of a distinctive medal to qualified flying instructors who completed an appropriate period of flying hours on instructional duties between 3rd September, 1939, and the end of the Japanese war.

The Prime Minister: In order to staff the basic training organisation of the Royal Air Force, it was necessary to direct some selected pupils on the completion of their own basic training to flying instructor employment, but arrangements were made for all eligible pilots so employed to pass in their turn to operations on completion of their instructional tour. Eight campaign Stars and a defence medal have now been instituted for service in the war and I do not think it would be wise to recommend the institution of further awards of a general character to satisfy claims of this kind in relation to specific types of service. The sterling work performed by flying instructors, often under conditions of great strain, is fully recognised and appropriate awards have been made in individual cases.

Sir W. Wakefield: While thanking the right hon. Gentleman for his reply, may I ask if he is aware that there is very strong feeling among the people concerned that there should be some sort of distinctive medal for the work they did, and the conditions under which they gave service?

The Prime Minister: I know that there is a lot of feeling in many quarters. But there are many borderline cases, and if one began to institute medals and stars for all, we should overcrowd the firmament.

Sir Ronald Ross: Was it not as dangerous to go up with some pupils as to fly over Berlin?

The Prime Minister: I think so.

Oral Answers to Questions — MINISTRY OF INFORMATION (CONTINUANCE)

Mr. Pickthorn: asked the Prime Minister whether the Government has now determined its policy about the future of the Ministry of Information; and, if so, what is the policy and when will it come into force.

Mr. Reeves: asked the Prime Minister whether any decision has yet been taken as to the future of the Ministry of Information in view of the ending of its war-time functions.

The Prime Minister: This is under immediate consideration, but it is not possible to make a statement at present.

Mr. Kenneth Lindsay: Whatever may happen to the home side of this Ministry, which may well peter out, will the right hon. Gentleman assure us that the overseas part will not be done away with until an over-all decision is taken, covering the British Council and the B.B.C.?

The Prime Minister: Yes. This matter is under general consideration in respect of the whole problem of our representation overseas and the need for seeing that news information about this country is properly put across to the countries outside it.

Oral Answers to Questions — CROWN SERVANTS'WIVES (TRAVEL FACILITIES)

Mr. Quintin Hogg: asked the Prime Minister how many wives of Service personnel and other Crown servants, respectively, have now been provided with passages to join their husbands; and how many of the latter were at the instance of the Foreign Office and of the Colonial Office, respectively.

The Prime Minister: This Question only appeared on the Order Paper yesterday. In the time at my disposal, it has not been possible to clear up with the hon. Member certain obscurities in the wording of his Question. When I have done so, I will arrange for the information which he requires to be sent to him by the appropriate Departments.

Mr. Hogg: Is the right hon. Gentleman aware that the question was drafted for me by the Chair? [HON. MEMBERS: "Oh."] Mr. Speaker, I did not mean that you drafted it for me, I mean that I had certain assistance—[Hon. Members: "Order."]

Mr. Speaker: I do not think the hon. Member ought to make reflections like that which would appear to mean the Clerks.

Mr. Hogg: Let me say at once, Mr. Speaker, that I did not intend any reflection. I hope that nothing was intended or understood to that effect. I really did not intend the smallest reflection upon the learned Clerks from whom I, like most other hon. Members, receive very great assistance; and if I seemed to put any reflection upon them, I can only say that it was totally unintentional, and, indeed, I should like to say—[HON. MEMBERS:

"Order."]—I should like to say that the innocent question I put is certainly not intended to be taken as a serious reflection on them at all.

Mr. Scollan: I would like to ask, if the hon. Member did not mean what he said, how are we to know what he means?

Mr. Speaker: The matter is a little clearer now. I am sure the House will accept the hon. Gentleman's apology.

Oral Answers to Questions — ATOMIC ENERGY (EXCHANGE OF INFORMATION)

Mr. Blackburn: asked the Prime Minister whether, in the formulation of the Government's policy on atomic energy, due weight will be given to the views of British and American scientists that the exchange of scientific information between scientists of those of the United Nations who played a part in the defeat of Germany and Japan should be resumed as soon as possible.

The Prime Minister: Yes, Sir. The Government has shown its desire to give due weight to the views of scientists by the appointment of the Advisory Committee which I announced to the House on 21st August last.

Mr. Blackburn: Would my right hon. Friend also bear in mind the view of these scientists that the research and production now proceeding on such an immense scale in the United States, should be devoted quite openly to the great peace-time uses of atomic energy and not to the production of bigger and better bombs for an indefinite purpose?

Oral Answers to Questions — CHIMNEY SWEEPS (SOAP RATION)

Dr. Stephen Taylor: asked the Minister of Food if he will arrange for chimney sweeps engaged in private practice to receive an extra allocation of soap.

The Minister of Food (Sir Benjamin Smith): Yes, Sir, as I am advised that on medical grounds an additional allowance of soap is desirable for chimney sweeps.

Lieut.-Commander Gurney Braithwaite: Could the Minister go a step further, and arrange for an extra allocation of soap to housewives, engaged in private practice, following the visit of the sweep?

Sir B. Smith: No, Sir.

Brigadier Peto: Will the Minister extend that privilege to those who handle coal from coal carts, and who get no extra soap?

Sir B. Smith: This allowance is granted on medical grounds, and the answer to that supplementary question is "No, Sir."

Oral Answers to Questions — FOOD SUPPLIES

Australian Mutton (Imports)

Squadron-Leader Sir Gilford Fox: asked the Minister of Food whether his attention has been called to the fact that although a large quantity of mutton is available in Australia it is not permissible for it to be exported to this country because only a few of the carcases available are free from lymphadenitis; and whether, in view of the fact that carcases from which the infected glands have been removed are entirely fit for human consumption, some steps will be taken to find a use for this meat in this country.

Sir B. Smith: A substantial quantity of Australian mutton and lamb has always been and still is being supplied to the United Kingdom. My Department and the Australian Government are at present considering the problem of meat from carcases affected with caseous lymphadenitis.

Lieut.-Colonel Mackeson: Can we be told why these carcases are being stopped from being sent to this country?

Sir B. Smith: They have been stopped up to now by the regulations of the Ministry of Health, but even if the import of the carcases affected by caseous lymphadenitis were permitted, it would not in any way, in my opinion, materially augment the supply of meat to this country.

Slate Miners (Rations)

Squadron-Leader Emrys Roberts: asked the Minister of Food whether he is aware that men engaged in the slate-mining industry have to carry to work their mid-day meal; that the conditions in which they work make it necessary for them to have a larger amount of cheese, butter and fats, than the present ration permits; that they have to eat dry bread for their mid-day meal at work because the butter ration is not sufficient; and whether he will consider making a supplementary issue to these workers.

Sir B. Smith: A special ration of 12 oz. of cheese per week in place of the ordinary ration is available for certain categories of workers, including slate quarrymen, who have to take a packed meal with them to their work each day and for whom the provision of canteen or other catering facilities is impracticable. I regret that I cannot see my way to grant supplementary rations of fats to the workers concerned.

Squadron-Leader Roberts: Is the Minister aware that these men are doing very heavy work entirely underground, producing an article which is essential to the housing programme, and that a supplementary supply of butter for their midday meal is necessary?

Sir B. Smith: I am aware that these men, together with many hundreds of thousands of other people, work underground. All I can say is that I am arranging for an additional one ounce ration of butter to be available from 11th November this year, which will somewhat augment the butter supply.

Mr. Maxton: Is not this an industry in which canteens could and should be provided?

Sir B. Smith: I would welcome the idea of canteens for this industry if it was possible. It is not my duty to set up canteens but only to serve them.

BANK OF ENGLAND BILL (SPECIAL REPORT)

Mr. SPEAKER laid on the Table,—Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Bank of England Bill he had made a Special Report, namely:

That in examining the Bank of England Bill pursuant to the Order of the House of 11th October with respect to the applicability thereto of the Standing Orders relative to Private Business, he had taken into consideration certain Standing Orders in respect of compliance with which a Private Bill would not have been referred to the Examiners until after the Second Reading of the Bill, and had found such Orders not to be applicable.

BILL PRESENTED

EXPIRING LAWS CONTINUANCE BILL,

"to continue certain expiring laws," presented by Mr. Glenvil Hall; to be read a Second time To-morrow, and to be printed. [Bill 18.]

FINANCE BILL (PROCEDURE)

Resolved:

"That, notwithstanding anything in the practice of the House to the contrary, proposals may be laid before the Committee of Ways and Means in the current financial year for charging income tax for the year 1946–47 and provision may be made in any Finance Bill introduced in the current year for giving effect to any Resolution passed for that purpose in Committee of Ways and Means and agreed to by this House."—[Mr, Glenvil Hall]

Orders of the Day — WAYS AND MEANS

Considered in Committee [Progress, 23rd October].

[Major MILNER in the Chair]

AMENDMENT OF LAW

Question again proposed,

"That it is expedient to amend the law relating to the National Debt and the public revenue, and to make further provision in connection with finance."—[Mr. Dalton.]

3.19 p.m.

Sir John Anderson (Scottish Universities): The presentation yesterday by the Chancellor of the Exchequer of his Budget proposals seemed to me to be a model of lucidity and grace. As he was speaking, it was hard for me to realise that on two occasions in the recent past I had essayed that task and, of course, performed it, as I well realise, much less artistically. Now I come to what, up to this moment, I have always regarded as the much easier role of critic. I am going to be a not unfriendly critic to the Budget proposals. They had, I think deservedly, a good reception in the country and in the Press, but there are a few points, relating more to the Chancellor's argument than to what he is actually proposing to do, on which I shall have to express some disagreement. Although I hope in the main to follow the order of the Chancellor's argument I want in the

first place to deal with the level of expenditure. I had something to say on that subject in the Debate on the Vote of Credit last week. The Chancellor told the Committee that he expected the results for the year to turn out very much as I had anticipated in my Budget speech on 24th April. I can assure the Committee I am in no way uplifted by that thought. When I made my speech, the expectation was that the Japanese war would continue throughout the year; that, at any rate, was the basis on which calculations were made. Even so, I did then hope, although I was not prepared to make any rash predictions, that a very much more favourable result would be achieved. Let me quote my actual words:
The Treasury will not, as the months pass, be content with evidence that the estimated figure is not going to be exceeded. We shall make the most strenuous and sustained efforts to ensure better results and I have great hope, though I cannot give any guarantee, that the outcome will prove much more favourable. On this occasion we shall take no pride in establishing the accuracy of our forecasts, so long as the deviation is in the right direction."—[Official Report, 24th April, 1945; Vol. 410; c. 718.]
It really is a staggering thought, as my right hon. Friend the Member for Woodford (Mr. Churchill) said yesterday, that expenditure is to be allowed to continue at the present rate for the rest of the financial year. It is perfectly true, as the right hon. Gentleman said, that there are items of expenditure which arise for the first tune with the cessation of hostilities. There are payments of gratuities, the repayment of post-war credits, payments in cancellation of contracts, and there is the effect of the termination of Lend-Lease. All these items have to be provided for.
Nevertheless, I cannot help saying that I think the Government are showing too great complacency in this matter. I do not want to suggest drastic expedients. I found myself more or less in agreement with the Chancellor's comments on the "Geddes Axe." I think, as I said last Tuesday, this is the business of the Government. The Chancellor and his colleagues, particularly those of them who are in charge of the spending Departments, ought to set about this business of economy with vigour. In my judgment, Treasury control ought to be exercised not from the outside, and operating on reluctant Ministers, but by co-opera-


tion between the Chancellor and the Ministers of the spending Departments, the drive coming, naturally, from the Treasury through the Chancellor. I cannot think that the Treasury are really satisfied with the present position. It is well to know, as we all expected, that the Government are to return to the normal system of estimating in the next financial year. That certainly is all to the good, and we are glad to be assured that it will be the Chancellor's aim and purpose to bring the national accounts again into balance as soon as possible. When he was speaking yesterday I wondered whether he really thought it would be quite satisfactory if the first truly balanced Budget could be achieved, as it was after the last war, after a period of four years. He said he hoped it might be possible to do it rather before. I join with him in that hope, for we must not overlook the fact that this time we shall be starting on the process of cutting down from a very much higher level of taxation, and that is a very important consideration.
The Chancellor said that in balancing the accounts, in bringing them into balance, the aim would be to secure balance over a period of years. By that I understood him to mean, that taking account of chance fluctuations, there would be no slavish adherence to the principle of making an exact balance every year, so long as by ironing out the short-period fluctuations, there was a balance on the whole. With that doctrine I am in entire agreement. I was glad to hear the Chancellor's commendation of the White Paper on Unemployment. Well might he commend it, because he had a substantial part in drawing it up. He said it was not a bad paper, as White Papers go. I would venture to say that it was a particularly good White Paper.
I pass on to matters more directly relevant to the Budget, because a Budget is, after all, an affair of Ways and Means and not of Supply. I entirely agree that it is right, prudent and proper to hold back purchasing power as far as possible until supplies of goods are more freely available. To this extent a high tax-level has an economic as well as a financial justification. I was glad also to hear the Chancellor's warm tribute to the leaders of the National Savings Movement. It was, in my opinion, very well deserved, and I should like

to add an expression of appreciation to the most devoted body of workers up and down the country, running into hundreds of thousands, whose selfless efforts have contributed so much to the very remarkable success of the Savings Movement. I note in passing that the Chancellor evidently has no sympathy with the views, as I thought very irresponsible views, expressed on the subject of savings by one or two of the Government's supporters.
I am glad also that the policy of price control is to be vigorously pursued until things return to normal. The Chancellor, in his remarks on that subject, did not seem to me to be quite so emphatic in regard to the importance of maintaining the stability of reasonable wage levels, though I cannot but think that he is in agreement with me on the point. In the White Paper of 1941—there are a great many vintages of White Papers, and this was an earlier one—in which the Foreign Secretary had a considerable hand, the connection between stable prices and stable wage levels was made very clear. It was made absolutely clear that the Government's hope of maintaining stable wage and price levels was entirely dependent upon the maintenance, through the operation of the normal negotiating machinery and through the exercise of wise restraint by responsible leaders, of a reasonable level of wages, avoiding any run-away rise.
I was very sorry that the right hon. Gentleman made so positive a declaration without any qualification or reservation about the determination of the Government to keep prices stable. I believe that success in that policy is, in fact, entirely dependent upon wages being kept at reasonable level. If they are not, the policy will inevitably break down and we shall be faced with all the dangers of inflation. I am not one of those who ever wanted to see wage control made subject to Government regulation during the war. I think the existing machinery has worked, on the whole, well, and we ought to continue to reply on it; but I do feel it my duty to emphasise this organic connection between price levels and wage levels.
I might say, incidentally, that I cannot help being in some doubt as to whether the Chancellor's estimate of the expenditure on subsidies that will be necessary to


give effect to his policy, taking account of all circumstances including the termination of Lend-Lease—an estimate, I think, of £300,000,000 a year—may not be somewhat exceeded, even if there is no untoward happening. That, by the way. It is not possible in present circumstances to estimate absolutely.
I could have wished that the Chancellor had been able to tell us something about the progress of the Washington talks. Much depends upon the outcome of those conversations. To me there is, I confess, an atmosphere of unreality about all our discussions of the financial position while the outcome of those talks is still uncertain. The matter is delicate, but I have the greatest confidence in the competence of our negotiators. I hope that patience and restraint will be exercised in all quarters, and I have no doubt that the right hon. Gentleman will come down to the House, as soon as he has any information of a definite nature, and impart it to us.
I pass to a different topic, the question of interest rates. As the Chancellor knows, studies on this whole question of interest rates had been in progress within the Treasury for some time before he assumed his present office. I do not hesitate to say that of I had been in his position, I should have done exactly what he has done. I do not think there is any ground for the perturbation that has been shown in some quarters in connection with this matter. For years before the war, rates on Treasury Bills were at a level of ½ per cent. When the war broke out, in the altered circumstances and in view of the fresh risks that leaders had to take, it was very natural that those rates should be raised, and they were pegged round about 1 per cent., till the other day. On Treasury deposit receipts, that new financial device, which have a slightly longer currency than Treasury Bills, the rate was naturally somewhat higher, 1⅛ per cent.

Mr. George Porter: Do I understand the right hon. Gentleman to make the statement that it was natural to increase the price of money during the war, when we were calling upon others to make great sacrifices, even to giving their lives?

Sir J. Anderson: I really do not think that question has any relevance to the

subject-matter. The point I am making is that the reduction which has come about is merely a natural process of reversing something that had been done at the outbreak of war. The whole problem of interest rates is rather fascinating. Interest rates, as far as I understand the position, do not respond fully to the ordinary economic laws of supply and demand. There is what may toe called a psychological factor that has to be taken into account. Also, one must take account of the position of the Government as the largest borrower on short term. Now that action is no longer hampered by the necessity for using the Bank rate as the principal instrument in regulating the exchanges, there is greater freedom than there was before, and there is probably much less ground for objection to maintaining a large body of short-term indebtedness. Not only are the Government in a position to exercise a greater control than was previously possible over short-term rates, but the question which, in my view, is the important question in connection with interest rates, the quest on of the proper relation between longer term and short-term rates, can now be tackled. I was glad to hear that the Chancellor is going into that matter. He has very competent advisers in the Treasury who, I am sure, will serve him well.
I come to the main matter in the scope of any Budget, namely, the question of taxation. On certain minor matters which I dealt with in my last Budget speech and which were the subject of Clauses in the Finance Bill which I introduced, and which had to be scrapped because of pressure of time, in circumstances which are familiar to all hon. Members, the Chancellor has seen his way to agree with, I think, all my proposals. The most important of those subjects was motor taxation. It is, perhaps, wrong to refer to that as a minor matter. Fiscally, it is, but it is of vital importance. The Chancellor has explained that, after the more mature deliberation which was possible for him, he has come to the same view as that which I expressed provisionally and tentatively last April, on all points in connection with this matter. I know, as he does, that his decision will not give entire satisfaction throughout the motor trade. I really had lost hope of securing unanimity in this matter on the part of those concerned. But what I do


hope is that now that all uncertainty is removed, the trade will settle down and tackle its job and will put the maximum drive into the production of cars for the export market, where I am assured the prospects are excellent.
I am very glad to know that the Chancellor of the Exchequer is going to proceed with the Clause in the first Finance Bill on the subject of double taxation. I hope he will retain that Clause in its wider form so that the powers to be taken can be applied to any arrangement on the subject of double taxation that may be made with any foreign country, or with our own Dominions. I know that the very important Agreement with the United States which was concluded before I left office has been followed by an Agreement with France. I hope other agreements are on the way. This Measure against double taxation, which is necessitated toy the high rates of tax now prevalent in most countries, will remove one of the most serious obstacles now remaining in the path of freer international trade.
The changes that the Chancellor announced in the Income Tax are, no doubt, properly to be regarded as the main feature of his Budget. With the restoration of the various allowances I am in complete agreement, but I might point out, in passing, that there is one allowance that has not been restored—the allowance in respect of earned income—although that part of the post-war credits which was attributable to the reduction in the allowance for earned income, is to go by the board with the rest. I think that there is an element of hardship there, and I doubt whether the failure to restore the special allowance for earned income to its former level, or even to raise it, is sound economically. Income Tax must remain, so far as I can see for any period to which we can look forward, much the most powerful weapon in the Chancellor's armoury. It must have a wide sweep and inevitably it will continue to press for some time to come with severity on all sections of the community that come within its scope. I agree with the Chancellor that it should not be carried so far down as to cut into incomes which are no more than sufficient to support the most moderate standard of subsistence. I think—I have thought for a long time—that that principle was violated by

the tax as it has stood up to now. The Chancellor's new proposals give a limit of £2 7s. a week for a single person, and £3 17s. for a married couple without children. I do not think anyone can regard those limits as in any way too generous. So far, the Committee will observe, I have no fault to find with the Chancellor's proposals. I think that there is no Budgetary justification for his proposals as to the standard rate, or for regrading in the lower levels of income, but I think there is a very strong psychological case, and for that reason I agree with them.
I would at this point pause for a few moments to consider what will be likely, in the long run, to be the economic effect, the effect on the national interest, of the Chancellor's proposals as regards Surtax, proposals which take back some part and, in extreme cases, the whole of the concession represented by the reduction in the standard rate. The Chancellor was not very forthcoming with arguments in justification of that part of the proposals, which were obviously very welcome to hon. Members sitting behind him. I would like to examine such arguments as he put forward, because this is an important matter. He said that during the war we had made a notable advance towards social and economic equality, and that what was right for war was not wrong for peace. I am not sure that as an argument that stands up very well, but let us examine it a little closely. Social equality has very little to do with the Budget. I would venture to say that the pursuit of economic equality, which certainly has something to do with the Budget, is rather a questionable doctrine. My study of the natural sciences has taught me that, in order that energy may expend itself in useful work it is necessary that there should be inequality—inequality of pressure, of temperature, of electrical potential. Unless you get inequality, no work is done. May not something similar be true in human affairs? May not equality, if we could achieve it, which we never shall, make for stagnation? Is a man to be reproached because he wishes and strives to do better than his neighbour?
I would say this—I throw it out for consideration—that economic inequality, from a national point of view, is not an evil thing but is positively good, subject to two conditions. The first is that the lowest level is not too low by whatever


standard of human needs is judged reasonable. The second condition—and this has some relevance to social equality—is that the higher levels are attainable to all, as rewards of character, ability and enterprise. I suggest that if these principles are followed, the interest of the individual and the interest of the community can be reconciled. So much for the first of the arguments that I understood the right hon. Gentleman to put forward. Then, he said, his proposals were designed to give the greatest incentive to the greatest number. I am afraid that as a statement of principle I do not very much like that either. So far as it goes, it is all right, but why, I ask—I am putting a series of questions, not wholly rhetorical—why weaken or destroy that incentive?

Mr. Montague: Money is not the only incentive.

Sir J. Anderson: Those who can put their hands on their heart and say that money is of no account to them should range themselves in a row and give themselves some special designation. Why weaken and destroy the incentive of the small number of men, exceptional individuals, whose services to the nation may far transcend that of battalions of ordinary men? To be deprived of the services of such exceptional men—we all know some of them—might be an immeasurable loss to the community. Some very exceptional ones might go on struggling and striving, even if all reward were denied them, but we have to take account of the world in which we live, and that is certainly not the common experience. I suggest that the test should not be "the greatest incentive to the greatest number," but whether your policy creates such incentives as will be of the maximum benefit to the community. That, I suggest, is the true test.
Why is the Chancellor doing this? He is doing it to avoid giving relief to what are called rich men. I hold no brief for such. I have been a public servant all my life, and I have never aspired to the higher levels of opulence, but I think that when we are talking about rich men we ought to take account of several considerations that are apt to be left out of account. Take the question of the value of money. Before the 1914–1918 war, the line for Super-tax purposes was drawn at

£2,500 a year. That figure to-day corresponds to £1,000 before the 1914–1918 war. It is right to take into consideration the effect of economic change in steepening the curve of progressive taxation.

Mr. Sydney Silverman: When the right hon. Gentleman says that the level of £2,500 corresponds in purchasing value to £1,000 before the last war, does he mean that the correct index figure, on which income levels should be calculated, is not 131, as the Chancellor suggested yesterday, but something like 250?

Sir J. Anderson: These are perfectly legitimate considerations, and if the hon. Gentleman can get out of the case I am making any argument which he thinks can be applied in another context, I do not mind. I was making a particular point.

Mr. Silverman: I want to follow the argument and I am trying to do justice to it. I understood the Chancellor to give yesterday the correct index figure for comparing the cost of living with 1939. I want to know whether the right hon. Gentleman dissents from the Chancellor's figure, and, if not, how he reconciles that figure with the statement that the value of £2,500 to-day is not more than £1,000 in 1914.

Sir J. Anderson: That is a little more than an ordinary interruption. I was taking the Chancellor's own figures and converting them in terms of pounds. The Chancellor said that a pound to-day has a value of 8s. compared with the period before the last war.

The Chancellor of the Exchequer (Mr. Dalton): The only figure I quoted which, I think, is relevant to the point now being discussed, was the cost-of-living index, which now stands at 131.

Sir J. Anderson: I thought it was in answer to an interruption, but I now find that it was in answer to a Question yesterday, that the right hon. Gentleman, said:
According to the best calculations available, the figure for "September, 1945, is 45. Calculated over the whole field of personal expenditure, the figure for September, 1945, would probably be about 40."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1871.]
That was the basis of the calculation that I made.

Mr. Dalton: It was in reply to a Parliamentary Question, not in my Budget speech.

Sir J. Anderson: I apologise for the confusion into which I fell, but not for the argument I ventured to put forward.
I was saying when I was interrupted that I thought that in discussions about this matter insufficient account is often taken of the effect of these economic changes in steepening the curve of progressive taxation. It has, however, a marked effect, and the fact that it comes about by insensible degrees does not deprive it of any of its significance. My right hon. Friend the Member for, Wood-ford gave yesterday a striking example, which is relevant to the point I am making as to the progress that has already been made in the process of taxing the rich The same point is illustrated by the fact that the Chancellor expects to get only £7,000,000 from this particular expedient against a gross cost of his reliefs of £97,000,000. At this point, I should like to quote from a speech, because it is I think very relevant, that was made from this Bench on the second day of the Budget Debate last April:
Take a very rich man who is paying not only Income Tax but also a substantial slice of his income in Surtax. He may be faced with a proposal to embark his capital in some fairly hazardous enterprise. If he felt sure that if he made a profit he would get it and that if he made a loss he would have to forgo not only a profit but the capital itself, he might still be willing to engage in that hazardous enterprise. But at the present time such a man is faced with this position: If his enterprise fails he loses his capital; if it makes a profit, no insignificant part of every pound of that profit goes in tax. Therefore, very often the rich man will hesitate about embarking on the hazardous enterprise, even though it might be very much to the benefit of the country as a whole that he should undertake it."—[OFFICIAL REPORT, 25th April, 1945; Vol. 410, c. 851–2.]
If the right hon. Gentleman has not been impressed by any of the arguments that I have used, perhaps he will take account of the words of his colleague Lord Pethick Lawrence, from whose speech I have just quoted.
I have little more to say; I agree with what the Chancellor has decided in regard to the Excess Profits Tax. I agree with all the arguments he used and I am glad to know that he is arranging to release the credits corresponding to the first 20

percent. of the existing tax. I think he may perhaps experience a little difficulty in devising machinery satisfactory to himself and to this House for giving effect to the statutory conditions embodied in the existing law; I do not think at will be altogether easy, and I believe he is right to make advances and consider farther how the conditions can best be enforced. I am inclined to think that the best course may be, in the majority of cases, to rely on a solemn declaration by responsible persons, reserving the right to reopen the transaction and investigate, and if necessary to recover sums that have been released if they are found to have been used in a manner inconsistent with the letter and spirit of the statutory provisions. That however is a matter which the Chancellor will no doubt consider.
In regard to Purchase Tax, I agree with the extension of exemption on which the Chancellor has decided. Until things become normal, or more normal, we should do well to retain that tax in some form. It has proved itself a useful tax, the public have got used to it, the machinery for its collection is in order, it brings in quite a respectable sum of money, and I think that if we could rely on it to bring in £100,000,000 a year it would be a very good weapon in the Chancellor's tax armoury. I see no reason why it should not be continued. The Chancellor spoke of this Budget of his as an interim Budget. Actually it is a final Budget, because we budget year by year, and mine was the interim Budget. What it really is, I suggest, is the first instalment of a process to be developed by His Majesty's Government, if they have the opportunity, during a normal term of office. I welcome the hope of further reliefs which the Chancellor's statement held out, but I think he was right to proceed, in the first instance, by very modest steps. The danger of inflation, as he observed, is always lurking in the background, and it will require a combination of appropriate measures to keep that danger at bay.
Although I have thought it my duty to be critical of the Chancellor on certain points, I confess that this, the first Budget of a fully responsible Labour Government, shows promise which I hope will be fulfilled in further instalments as they go along. My last word to the


Chancellor is this: "Watch the spending Departments with an eagle eye; great responsibility rests upon you, for there lurk the foxes that eat up the vines of expanding revenue, and would deny to the people the tender grapes of social and other benefits for which their mouths are watering, and which we in all quarters of the House would wish them to have and to enjoy."

4.6 p.m.

Mr. Benson: I should like to add my congratulations to the Chancellor on introducing his first Budget. It is nearly the most popular Budget that has been introduced for 20 years. I can only think of one Budget which has given greater satisfaction to this Committee than the present one, and that, paradoxically enough, was the one in which Sir Kingsley Wood clapped eighteen pence on the Income Tax and raised the standard rate to 10s. This is the first Budget of the present Chancellor and the first peacetime Budget and, as he said, it is really the beginning of a thought-out and considered process, and must not be judged solely on one year.
I have always been a great admirer of the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) and particularly of his clear and logical mind, but I must say that in his attempt to defend inequality he did not arrive at his usual high standard of logic. He laid down two propositions, first that the highest rewards should be within the reach of all, and second that the services to the community of exceptional men should reap high rewards. I do not think anybody on this side of the Committee would disagree with those two propositions, but what I think we do disagree with is his suggestion that either of these two propositions are characteristic of the capitalist system. The right hon. Gentleman referred to the highest rewards. But the highest incomes in this country are not the result of individual effort, they accrue to the owners of the great landed estates. [Hon. Members: "Oh."] Yes, they do. [An Hon. Member: "What about Lord Nuffield?"] There may be odd exceptions, but, broadly speaking, the majority of the very high incomes are derived from the ownership of land which is inherited.

Sir Frank Sanderson: Surely my hon. Friend appreciates that many of the great industrialists in this country commenced from small beginnings?

Mr. Benson: It is no use pretending that reward enters into inheritance in any way.

Mr. Osborne: On a point of Order. The hon. Member said it was impossible for those two things to happen under the capitalist system—

Mr. Benson: I submit that that is not a point of Order. The right hon. Gentleman the Member for the Scottish Universities also said it was essential that men with exceptional capacity for social service should reap high rewards. I am not prepared to differ with the right hon. Gentleman on that point, but I would point out that social service of high intellectual quality is given to this nation by the technicians and research workers, who for the most part get a beggarly pittance as compared with the people who are enabled, by their business acumen, to exploit the discoveries that they make. An hon. Member has mentioned Lord Nuffield. It is not Lord Nuffield who designs the cars, it is not Lord Nuffield who has the technical knowledge to choose for example the particular steels required. These things are done by his technicians on salaries—and not particularly large salaries. Lord Nuffield's enormous wealth derives not from his technical ability but from his business acumen.
As I have said, this is a popular Budget. It is the first peace-time Budget, but unquestionably it is made under the shadow of six years of war. During the past six years there has been an enormous expansion in the cash income of the nation. It has grown from £5,000,000,000 to £9,000,000,000, but this has been very largely a fictitious growth. At the same time as the cash income has expanded, the volume of goods and services available has decreased by 20 per cent., and the only possible way in which we have been able to hold prices under those highly inflationary conditions has been for the Government steadily, year by year, to absorb the whole of the increased growth of the national income. That has been done with respect to approximately half by very savage taxation, and the other half by borrowing. The Government has been


able to carry out that policy because of the acceptance by the nation of the need for austerity in war-time. The nation has met its responsibilities and difficulties, financial as well as military, with extraordinary responsibility. In the present situation there is still an enormous excess of income over goods available for purchase, and as the right hon. Gentleman says, from an economic standpoint there is not the slightest justification whatsoever for any tax reduction at all.
But the Chancellor's immediate problem is neither a fiscal problem nor an economic problem. It is purely a psychological one. The Chancellor has to face at least three, if not more, important factors. The first is that after six years of austerity, austerity tends to pall; the second is that the coming of peace inevitably brings a demand for some form of relaxation and the third is the effect of high taxation upon industrial output. There is no question that six years of high taxation, during much of which the Income Tax rate of 10s. in the pound fell on a not inconsiderable residual part of wages, had a very serious effect on industrial output. I think the Chancellor is right; some concession to the present mood of the nation was essential, and whether or not he gets the stimulus from the tax reductions for which he is hoping, one thing I think is obvious, and that is that he has probably done a good deal less harm by giving the concessions than he would have done if he had refused to give them.
When I listened to the Chancellor's proposals, one after the other, and found that he was making a concession of some £300,000,000 on Income Tax, I was a bit startled, but after a little I realised that the Chancellor is a very subtle man and that the risk is far less real than apparent. He has been able to make what was necessary—a spectacular concession—because he will not have to foot the bill for some considerable time. The effect of the announcement of these concessions is bound to be good, but it will not cost the Chancellor a penny until next April. [An Hon. Member: "What about the Purchase Tax"?] I was referring to the big Income Tax concessions. On Schedule E where P.A.Y.E. operates the concession is spread over 12 months, and the last part of the concession will be granted 18 months hence. And on the

other schedules no concession is operative until about March, 1947. Thus the Chancellor has been able to make the necessary spectacular gesture to the country with considerable safety. What is more important is that by the time the concessions come into operation there will be a much bigger flow of goods to meet the increased purchasing power.
I think the Chancellor and the Committee must recognise that the primary and most important stimulus that can be given is to make money really worth while by seeing that there are goods to purchase. Anything that can be done to expedite the supply of goods is of vital importance. If something can be done in that direction I am certain we shall hear a good deal less about absenteeism than in the past, and that the goods will be a far more effective stimulus than any tax reduction.
I am well aware that the flow of goods depends upon the change-over from war to peace conditions, but there is something which can be done immediately, and I think it is of very considerable importance. I believe that if the Government are prepared to expand and extend very widely the range of utility goods, we can increase output. One of the curses of British industry before the war was the extravagant costs of production due to the multiplicity of types. We cannot afford that extravagance at the present time. The expansion of the range of utility goods would have that immediate effect of standardisation, would give an opportunity for mass production, and would lead to an enormous economy in every part of the process of production, from the production of the raw material to the stocking of the retail shops. This is a matter more for the President of the Board of Trade than for the Chancellor, but the Chancellor is also interested. The expansion of the range of utility articles would give the Government an opportunity of controlling price and controlling quality, and it would give real possibility of first-class design, for there is no reason why utility goods should be poor quality․

4.20 p.m.

Whereupon, The GENTLEMAN USHER OF THE BLACK ROD being come with a Message, The Chairman left the Chair.

Mr. SPEAKER: Mr. SPEAKER resumed the Chair.

Orders of the Day — ROYAL ASSENT

Message to attend the Lords Commissioners.

The House went; and, having returned—

Mr. SPEAKER: Mr. SPEAKER reported the Royal Assent to:

1. Indian Franchise Act, 1945.

2. Coatbridge and Springburn Elections (Validation) Act, 1945.

Orders of the Day — WAYS AND MEANS

Again considered in Committee.

[Major MILNER in the Chair]

Question again proposed,

"That it is expedient to amend the law relating to the National Debt and the public revenue, and to make further provision in connection with finance."

4.29 p.m.

Mr. Benson: There is a small point on which I would like my right hon. Friend the Chancellor to give me an answer. It has been fairly widely assumed that one of the important reasons for an interim Budget was the problem set by the changing of the codes for P.A.Y.E. The printing of these millions of codes involves a great deal of time and labour, and it cannot be done until after the announcement of an Income Tax change has been made, with the result that if it is desired to make a change in the Income Tax in April there must be an Autumn Budget and an Autumn Finance Bill. Whether or not that is so, I do not know, but it has been fairly widely stated.
I do not know whether or not that is correct. But if so it raises a very important point. Hon. Members will remember that in the White Paper on Full Employment, one of the important questions was the variation in the rate of Income Tax. Income Tax should either be increased or decreased according to whether the Chancellor wished to decrease or increase consumption. The essential factor of control as an effective weapon against trade cycles, is that it shall be capable of being put into action immediately. If the Government are aware of an undesirable trend in trade, it is no use waiting for six months to put counter measures into operation. These must be put into opera-

tion immediately the trend is felt. If we cannot vary our Income Tax law without six months' notice, then one rather effective measure in the control of the trade cycle and the maintenance of full employment has been struck from our hands. If that is so, we shall have to consider whether it is not possible to make some very drastic simplification in P.A.Y.E.
The Chancellor's reduction of E.P.T. to 60 per cent. will be generally welcomed. I cannot conceive of any other tax which is more destructive of any incentive to efficiency and economy than an 100 per cent. E.P.T. As a war-time tax, nobody will dispute that it was essential and that we were, perhaps, in the rather fortunate position of being able to control, at any rate its worst effects. The Government were the purchasers of anything between a half and two-thirds of the total production of British industry and we had, at the same time, a vast and elaborate system of costings, which is impossible in peace time. And so, the sooner we can get rid of E.P.T. the better. I noticed that the Chancellor said there was to be no deficiency repayment after the end of 1947.
I do not know whether I am correct in making a surmise from that, but it almost looks as if the Chancellor proposes to abolish E.P.T. in two strides, one the 60 per cent. already mentioned and the other to take place in January, 1947. Mention has been made by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) of the proposal to repay 20 per cent. to industry for "ploughing back" purposes and that, I have no doubt, will be greatly welcomed, but it is very easy indeed to over-rate its importance.
The requirements of British industry for the change-over are not financial. There are no financial worries, taking industry as a whole. Certain individual firms might possibly be short of finance, but as a whole British industry is in a more liquid position than it has ever been before. It has thousands of millions of pounds of liquid resources at its disposal. A very large proportion of the enormous bank deposits are held by industry. Industry holds some thousands of millions of Government securities. There is no shortage of cash. The real problem of the industrial change-over is something far more intractable than the mere provision of finance. It is the provision of the


actual plant which is necessary, and that does not depend on tax remissions or tax repayments or on financial capital, but upon the amount of resources of labour and material the country is prepared to allocate to capital formation. That is a very much more difficult problem. There was a very gloomy article on the subject in last week's Economist, in which the writer attempted to assess how much of our resources were likely to be available for such transformation. It is an extraordinarily gloomy subject.
To begin with, the size of the problem is so colossal that it is very difficult to see where it begins and where it stops. If we look back over the history of the last 15or 16 years, right through the 'thirties, we see that no new capital whatsoever on balance was put into British industry. Apart from engineering, there has been no possibility during the war of replacements, and so we can assume, on general principles, that the bulk of British plant outside engineering is at the present time largely obsolete and partially worn out. We have had one or two inquiries and have confirmed that general conclusion. The Platt Report, the Reid Report, and the much less known and unofficial report by the Potteries trade unions into the industrial conditions of the Potteries, confirm the worst forebodings we can have about the position. I want to stress the future struggle that this country is bound to face. In view of our future difficulties, the efficiency of British industry should receive a great deal more attention from this House than it has done in the past. We must also realise that we cannot take the old British pre-war standard as a standard of efficiency. We have to take the standard of our competitors, and our major competitor is the United States of America. We find, taking American factory production as a whole, that their output per man-hour is double the output in this country, and that is linked very closely with the fact that United States industry employs twice the horse-power per head of employees that British industry does. What does that mean? It means that we have to double our industrial equipment per employee, and that we have to take an entirely new standard because the old British standard of efficiency is as obsolete as British plant.
Another factor is that the United States is certain to equip devastated countries with modern up-to-date equipment. Her own surplus production is going to be so colossal that she will equip the Far East, China and India. For some time, she has been busy equipping South America with the most modern industrial equipment. It is that type of equipment abroad, the modern up-to-date equipment of American standards, that this country will have to realise it is up against industrially in the post-war world. Equipment out of our own resources, on anything like the scale necessary and in anything like the time that will be allowed to us, is out of the question. If we are to equip ourselves on the scale that we must and which will be forced upon us ultimately by foreign competition—it is no use retying on our own resources—we shall have to look to the United States for a very large proportion of our re-equipment of plant in the near future.
The Treasury at present are desperately concerned with the conservation of dollars, and I am well aware that it is extremely undesirable to borrow a single avoidable dollar if that dollar is to be used on current account. The borrowing on capital account is a horse of an entirely different colour. There is at the moment in the United States an organisation known as the Export and Import Bank. It is for the purpose of lending on capital account at extremely low rates of interest. Before very long I hope that we shall accept the Bretton Woods proposals, and Part II is designed to facilitate capital re-equipment at extremely low rates of interest. Nobody will deny that we cannot afford to borrow a single unnecessary dollar on current account, but borrowing at low rates of interest will enable us to re-equip our industry rapidly on the most modern lines, and this is not only desirable but absolutely essential. If we are to do that, the Government will have to put as much drive into stimulating our industrialists to borrow on capital account as they have into resistance against borrowing on current account. If we do not do that, then clearly, we shall be faced with an attempt to re-equip ourselves out of the residual amount of national resources, which is quite inadequate for the job in hand.
The record of British industrialists, as far as efficiency is concerned, in the last 20 or 30 years is not a happy one. We


now have a Labour Government. We realise that despite that Labour Government and that Labour majority, for a long time to come the majority of British industry will be in private hands, but, having our majority, we can coerce British industry into efficiency, if we cannot persuade it. I, for one, hope that, if we cannot persuade it, the Government will not hesitate to take the steps necessary to coerce.

4.45 P.m.

Sir Stanley Holmes: The Chancellor of the Exchequer yesterday reminded us that this is the first Budget in time of peace after we have had a series of wartime budgets. I feel that this is an appropriate occasion on which we should pay tribute to 'the men who, during the war, have drawn up the financial policy of this country—a financial policy which has been so successful. I refer, of course, to the three Chancellors of the Exchequer—Lord Simon, the late Sir Kingsley Wood and my right hon. Friend the Senior Burgess for the Scottish Universities (Sir J. Anderson), who addressed us this afternoon, and I think I might add the right hon. and gallant Member for Gainsborough (Captain Crookshank), who was Financial Secretary to the Treasury under all three of them. When we think of it, a most remarkable achievement was brought about by this country. We were able to raise the huge sums necessary for carrying on the war for six years, and more than half of them by taxation, and, during that time, interest rates not only did not rise but actually went down, and the amount of inflation which we had in this country was, comparatively, very small indeed. I think it is worth while to trace how, by successive methods of taxation, this result was achieved.

The first new tax put on by the then Chancellor of the Exchequer, and this was actually before the war, was the National Defence Contribution, which was quickly followed by the Excess Profits Duty, and the Committee will observe that the first two taxes introduced were put on business. Reference has been made to the Excess Profits Duty—the hon. Member for Chesterfield (Mr. Benson) referred to it a moment ago—and we all know that it was a burdensome tax and one that removed all incentive to economy, but it

was a necessary tax, in time of war particularly, when it was raised to 100 per cent., because everyone was agreed that, in carrying on this war no one should make any money out of it, and that was the best way of assuring that result. Then, the Chancellor of the day proceeded to raise both Income Tax and Surtax, and did it to such an extent that, eventually, over a certain income, a man was paying19s. 6d. in the £ and retaining only 6d.
I remember, a number of years ago, the present Chancellor of the Exchequer making a speech which created something of a sensation. I am not sure whether it was in the House or outside, but he said that no man should have more than £10,000 a year. He did not have to wait to be Chancellor of the Exchequer in order to arrange that. His predecessor had done it for him by means of Income Tax and Surtax. If a man has the fantastic income to-day of £70,000 a year, he retains £5,000 of it and the Chancellor, in Income Tax and Surtax, takes £65,000. [Hon. Members: "Shame."] I am pointing out that the Chancellor himself is not having the opportunity of putting into effect his own view that no one should have more than £10,000 a year, because, already, his predecessors have seen to it that no one has more than £5,000, and very few people as much as that.
The next thing that was done was to tax up to the hilt what one may call non-necessaries—wines, spirits, beer, tobacco and entertainments. After that, still more money was required, and the Chancellor of the day had to come down to the people with the lower incomes, so he reduced allowances in various ways, and then, finally, we had the Purchase Tax. Nobody likes the Purchase Tax, but everybody admits that, when goods are short, it is a most desirable tax to impose. These were the methods by which this financial policy, which has proved so successful, was imposed on the nation by the National Government in time of war. I feel that now has come an opportunity, when we have come to times of peace, as it were, to cast our minds back on these methods and see how they fit in with the present Budget and how they are likely to fit in in the future.
It is quite obvious that all the proposals that the Chancellor put before us yesterday would not have been included in the Budget of my right hon. Friend, if he


had still been Chancellor, but I do not think there would have been very much difference. The first change which the Chancellor proposed was to modify the existing provisions regarding the liability to duty of oil used in premises classified as "refineries" so as to relieve from duty hydrocarbon oils used as materials for processes of chemical synthesis. I am bound to say that the right hon. Gentleman the Member for the Scottish Universities did not think of that one, so I think the Chancellor, to that extent, started with something that would not have been put in if the National Government had remained in office. Apart from that, I think everything done by the Chancellor in this Budget would have been done, with, possibly, some modifications, by the National Government if they had remained in power. One might almost quote a French writer of 100 years ago:

"Plus ça change, plus c'est la même chose."

In a House in which the tone has been raised since the General Election, there is no necessity for me to translate.

Mr. Medland: Not at all; it is as intelligent as the rest.

Sir S. Holmes: What did the Chancellor do yesterday? In the first place, he proposed a very slight alteration in the Purchase Tax on domestic articles that are very desirable. I think he might have gone further, and I think my right hon. Friend on this side of the House would have done so, had he been in the right hon. Gentleman's place. The Chancellor gives us something back in regard to allowances, and very properly too. I quite agree that the lowest income earner should be the first to receive relief, but he has not given them quite as much as he might have done. My right hon. Friend referred to the fact that the earned income allowance has not been restored, and I would like to point out that, whereas in the past the first £165 a year of taxable income was taxed at a reduced rate, the Chancellor is now only going to do it on the first £125. The tax is going to be 3s. on the first £50 and 6s. on the next £75, making an allowance on £125, as against the previous £165. So far as taxes on non-necessities are concerned, no alteration has been made.
There is one tax on which, I believe, if there had been another Chancellor—one

who had carried on from the previous Government—a concession would have been made, and that is Entertainments Tax. It was discussed and considered sympathetically on the last two Budgets. It concerns Entertainments Tax on games and sports events, but not including those in which horses, dogs or other animals are involved. The Committee will remember that, some years ago, in 1935 actually, it was agreed to reduce Entertainments Tax for theatrical performances, the purpose being to protect the living stage from competition with the cinema. Games and sports events suffer equally from competition with the cinema. Sports bodies are usually run by honorary officials, and, in many cases, get their funds for the purpose of the extension and development of the game or sport and use that money for the purpose of improving the physical well-being of the nation.
I propose to give two short examples. One is the Amateur Boxing Association. This association has used practically all its surplus money for years in teaching boxing to boys through the schools and training them in the noble art of self-defence. They used to have an annual championship, and, in 1938, the receipts were £1,843, and the Entertainments Tax was £288. The result was that, after they had paid expenses, they had £916 to devote to their propaganda work. They have held only one championship since the war began, and that was in July, 1944, when the receipts were £913, and the duty on £913 was £402, and the result was that the profit left to them for propaganda purposes was £59. My other example is the Amateur Swimming Association. They devote their time to promoting the art of swimming among both sexes and they encourage the teaching of children in schools. They had a small swimming gala last summer, and the total receipts were £56. Out of that, nearly £22 was taken in taxation, and the net profit on the evening was £6. I do not want the Financial Secretary to deal with this at any length in this Debate, because I hope I may give notice that, together with a number of hon. Members of the Committee, I propose to put an Amendment down to the Finance Bill, when the matter can be discussed in detail.
The next alteration that has been made by the Chancellor is Income Tax and I think we are all prepared to agree to his


proposal. Frankly, I do not think any people with high incomes will grumble at the fact that although their Income Tax has been reduced by 1s. in the £ their Surtax has almost correspondingly been put up. It is obvious that we all have to be thankful we are alive to-day. Business men have to be thankful that they can carry on their businesses, and we have all to be prepared, for many years, to pay our full quota from the means we have, so I shall not object in any way to there arrangement of Income Tax and Surtax.
With regard to Excess Profits Tax and National Defence Contribution, the proposals will undoubtedly be of the greatest possible value to all businesses in preparing themselves for the great trade fight that we have before us. I am sorry that the Chancellor appeared to feel so badly with regard to directors of companies. I could not help feeling that he spoke in a somewhat sneering way, as if their only idea was to pay additional, dividends, and that there had been neglect in the past in equipping factories in the way they should be equipped. I can talk with some experience with regard to factories. The difficulty, right through the war, has been to get machinery. One has had to improvise by getting hold of second-hand machinery and keeping it going. We have a tremendous battle against America so far as trade is concerned. America has not felt the war at all. They have carried on in their factories in exactly the same way as they did in time of peace. All their machinery has been improved and is new and up to date. They have gone a tremendous distance during the war in regard to new kinds of packages. What has happened to all our people who used to sell various goods wrapped up in cartons and so on? They have been forbidden to use them, so while America has been striding on with new and attractive ideas, we have been prevented from doing anything at all.
The sooner the machinery makers of this country can be got going—and there must be plenty of men who would be delighted to work for them, and plenty of skill as a result of working in war factories—the quicker those machines can be turned out the quicker will all the other factories which send goods all over

the world get going. So I hope the policy of the Government with regard to finance will continue on the present lines. I want the Chancellor to believe that in giving a reduction in Excess Profits Tax, in promising to pay back part of that 20 per cent. which has been retained, it will be used by nearly every responsible industrial leader in this country to build, if necessary, new factories—because very many are needed owing to the numbers destroyed during the war—in putting in new machinery, or in making arrangements overseas for promoting the export trade that is so necessary. I am sure he will get the utmost co-operation from everybody engaged in industry in pursuing this plan.

5.6 p.m.

Mr. Mallalieu: In one way or another I have watched and loved this great House for some 29 years, ever since my father brought me here as a small boy of 10; and one of the qualities of this House which I have liked most is its immense patience—the patience with which it submits to lectures on procedure by comparatively inexperienced Members like the hon. Member for Oxford (Mr. Hogg) and, above all, the patience with which it listens to the wholly inexperienced Members who, like myself, ask the indulgence of the House for their maiden speeches. There have been signs in this House of Commons that that particular patience is coming near breaking point and I shall try, by sitting down very soon after a quarter-past five, to avoid being the last straw.
I welcome this Budget. I welcome it in detail and, above all, I welcome it for the principle which lies behind it, the principle—which the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) sought to undermine—of removing that inequality which we on this side of the House consider to have been our country's social and economic curse. I welcome the first steps that the Chancellor has taken towards removing that inequality, those steps being the increased Income Tax allowances. I am glad he has done that. I hope he will do more. I know the indignation that people living near the subsistence line have felt when they have had to pay Income Tax on their very small earnings. I myself for 13 months, whilst serving as an ordinary seaman, was paid


each week the sum of 21s. in cash and you can imagine, Mr. Beaumont, the indignation that I felt on coming in from long weeks at sea to receive a demand for tax upon that miserable pittance. I do not have to mention to the seamen in this House what I did with that demand.
One thing I specially welcome about this concession of allowances is the indication it gives of the Chancellor's mind that the sum of £2 7s. is the bare minimum for subsistence for a single person, and that £3 10s. is the bare minimum for a married couple. I beg him to bear his own figures in mind when it comes to the consideration of what really is an adequate old age pension.
Now the Chancellor has begun in direct ways to help the poorer paid people of our country, but there are many indirect ways as well in which he could help. I only want to press one or two upon him at the moment—he will receive pressure from many quarters and on many aspects. The first is about the Purchase Tax. I would ask him to consider removing altogether the Purchase Tax from public playground equipment, for this reason. Hon. Members know—particularly those of them who are fathers—that individual private toys at the present time are not merely shoddy in material but exorbitant in price. They are an example of how the less reputable advocates of private enterprise, if left uncontrolled, will form nasty, mean, petty rackets. Because of that, the only way in which so many of the poorer children can get any mechanical enjoyment is upon the swings and the slides we used to see in our public parks. I have been told that there is plenty of this equipment available—there is no question of diverting supplies to manufacturers—and the only thing which is preventing public authorities from buying it is the exorbitant price, and that is due to the Purchase Tax. I would ask the Financial Secretary to consider this matter to see whether or not it is possible to remove that tax.
A second point in which, indirectly, the Chancellor can greatly help the happiness and well-being of the poorer section of the nation, is on the point raised by the hon. Member for Harwich (Sir J. Stanley Holmes)—the reclassification of sports into live entertainment. I happen to be particularly concerned for my own pleasure with the sport of Association football, and I know that as a result of the

war, very large numbers of these "soccer" clubs are in a shocking way. They have had their grounds blitzed, they have had very poor gates, and they have lost money. Some of them have been closed down.
I was told the other day by the hon. Member for Devonport (Mr. M. Foot) that the board room of Plymouth Argyle could now pretty well be classified as a special area. I think if the right hon. Gentleman could make this reclassification of games, into the section of live sport for the purposes of the Entertainments Duty, it would be possible for these clubs to build up reserves. They are not like industrial firms, who have been building up reserves in the war. They have not been able to do that. Let them, therefore, build up their reserves against the day when it will be possible to provide labour and material for the rebuilding of their grounds. Because, remember, the game of soccer is the weekly delight of hundreds of thousands of ordinary people, and among ordinary people I include the Foreign Secretary, the First Lord of the Admiralty, the hon. Member for Devonport and myself. I would beg him, therefore, to consider this change in the tax.
I cannot expect the Chancellor to give wholesale concessions to right and left—what he gives to one group with one hand he has made perfectly clear he will take away from another group with the other hand. I was a little surprised that he did not make the task of giving further concessions a little easier. I was a little surprised that he did not consider putting some further limitation on inheritances. I first heard the name of Rignano from the Chancellor of the Exchequer. He was at one time a very great advocate of the Rignano plan, and I hope that in subsequent Budgets at any rate, we shall find a still further drastic scaling-up in the limitation upon inheritances. I cannot expect hon. Members opposite to approve of that, for it is curious that they who, in their public speeches, demand that people shall stand upon their own feet, that they shall not be spoon-fed, seem to be the very first people who demand that their children shall be silver-spoon fed.
Now, I do not think that by putting up Death Duties you can get all that the Chancellor will require. I further think that it will be impossible for him, under the present system, to get more by direct taxation. I believe that the limit of


direct taxation in a system of private enterprise has not only been reached, but has been passed. It has been proved conclusively that getting a reasonable living and serving the public is not sufficient incentive for private owners of the means of production. They seem to need something else, and we can only give them that something else by a reduction in taxation. By that means we can get the increased production which we must have. But if we are to suffer a reduction in direct taxation we shall have to cut something, probably the social services. Except for a few museum pieces, there are not many hon. Members even among those opposite who are prepared to advocate cuts in the social services. So there is the dilemma. The only way private enterprise can be get to work is by a cut in direct taxation, and that cannot be done without cutting the social services.
What can we do? I suggest that what we as a Labour Government can do is to do what we were sent here to do—get away as quickly as we can from the old ideas of private individual enterprise to those of public enterprise, where profit is no longer the motive and where a reasonable standard of living for oneself, combined with a desire for public service, is the main incentive. I know well enough that most hon. Members opposite will not approve of that, and I do not expect them to because they do not believe in it. But we on this side believe in it with all our hearts. With the great majority that we have here I believe that we should listen courteously and earnestly to the individual views of Members opposite on matters of detail. I do that myself, and I learn a great deal. But when it comes to questions of fundamental political and economic philosophy, for their philosophy I do not care a rap. That philosophy does not matter any more, at least for the next four years, and I ask our Front Bench to ignore it entirely. I ask them to turn this way and to realise that if they go forward on the road towards Socialist public enterprise they will receive the united, vigorous and selfless support of the Members on the benches behind them.

5.18 p.m.

Mr. Spearman: I consider I am fortunate inas-

much as it has fallen to me to congratulate the hon. Member for Huddersfield (Mr. Mallalieu) on his maiden speech. I think he impressed the whole Committee with his sincerity and modesty, and, if I may add it, his commonsense. I am sure he will not misunderstand me if I say that I do not agree with all his views, but I am sure the Committee will wish me to say that we all look forward to hearing him again soon.
The Chancellor of the Exchequer has received praise for his speech yesterday from such important quarters that I am a little diffident of adding my own congratulations. But as one who knew him long before I came into this House, I would like to ask the Financial Secretary if he can find the time to pass on a tribute from me to his right hon. Friend. I think the Chancellor gave the most brilliantly lucid exposition of a difficult subject that we could possibly have had. While he was speaking I thought how very different his position was from that of his predecessor in 1929 and 1924. First, there is the obvious difference that Mr. Snowden was in the rather perilous political position of being at the mercy of a combination of our parties, whereas my right hon. Friend is in the very strong position of being supported by an overwhelming majority of Members, and thereby being able, to a great extent, to do just what he likes. There is another difference which, I think, wants emphasising. At the time Mr. Snowden was Chancellor, this country was a great creditor country; now we are the greatest debtor country in the world. I know it is fashionable among some hon. Members opposite to decry the value of foreign investments, but I think they have come in useful on more than one occasion, and I suggest they can act, to some extent at any rate, as a shield against the consequences of any rash act by a Government. I suggest that it does behove the Chancellor to mix a great measure of caution with the boldness and vision which he possesses.
There is a third difference, perhaps the most important of all—the complete change in the outlook on taxation. Once upon a time we considered Income Tax as a weapon exclusively for raising revenue, and on the skill of the Chancellor depended upon how well he was able to devise measures for raising that


revenue with the least burden to the taxpayer. Then there has been the growing view that it was a weapon with which to redistribute the wealth of the country, and now there is a general recognition that perhaps the main function of Income Tax is as a weapon to regulate total expenditure, to see that the expenditure of the consumer, plus that of the State, does not attempt to exceed the total resources of the country, but ensures that there is expenditure sufficient to absorb all that the country can produce. I am perhaps not so keen as hon. Members on the other side on extending the functions of the State, but I have always held that the State must do what only it can do and what it can do immeasurably better than anybody else. We might very much disagree as to what things the State can do better than other people, but I think we can all agree that the function of assessing what are the total resources of the country, and calculating what consumers will take, is something which can only be done by the State. I am confident that the Chancellor has at his disposal brilliant members of his staff who are well qualified to undertake that great task, to enable him in future adequately to gauge what ought to be spent and to encourage or discourage consumer expenditure according to their calculations.
I am rather disappointed that the Chancellor did not give us any estimate of what he thought our total resources might be, or what total demands would be. He appeared to be pre-occupied, as I thought, with the more old-fashioned view of examining the matter entirely from the narrow outlook of Treasury receipts and expenses. As I see it, the Chancellor has three birds to hit. First, he has to balance the Budget. He made it clear that there was not much prospect of that for some little time to come, and I do not quarrel with that at all. I would not, perhaps, go so far as those economists who say that it does not matter for how long you have a deficit on the Budget so long as the interest on that deficit does not represent a growing proportion of the national wealth. It is, however, quite clear that he have had deficits for some time which have not led to inflation, and it is quite clear that a Budgetary deficit need not lead to inflation. So, I would not put that objective in an order of high priority. Next, there is the question of the redistribution of the national wealth.
That I am sure the Chancellor would wish to take further and, in fact, as we know, he took it further yesterday. He probably intends in the years to come to go still further. I would like to emphasise just what has happened in the last few years by quoting from the White Paper issued at the time of the last Budget. I am not sure that Members opposite are always fully aware of what an immense change there has been in the distribution of the wealth of this country. Unlike an hon. Member who spoke earlier, I am rather diffident about my French accent, so I will translate the French proverb which I think is applicable to this point. It is, "There are occasions when it is worth while holding back in order to jump higher later on."
In 1938, the number of people in receipt of incomes between £250 and £500, the lower income group, after taxation, was 1,800,000. To-day it is 5,300,000. In 1938, the number of people in receipt of over £2,000 net was 75,000; now it is 33,000. In 1938, the number of people with net incomes of over £6,000 a year was 7,000; now it is 80. There are only 80 people, according to this White Paper, with incomes over £6,000 a year net, as compared with 7,000 in 1938. The total net incomes of everybody over £2,000 a was £340,000,000 in 1938; now it is only £211,000,000. As compared with that, the total income of everybody in receipt of £250 to £500 a year was just under £600,000,000, and now it is just under £1,600,000,000. Without denying that hon. Members opposite will want to go further with the redistribution of wealth, I suggest that this is not the moment when it is so imperative to do it that it is worth upsetting the other objects in view. I would have thought that we had gone far enough for the moment to satisfy all except those who aim at the complete so-called equality so beloved of authoritarian States. That, I submit, really means giving up our freedom and independence for a régime of class distinction and privilege which, we hope, we have put behind us in this country.
The third bird at which, I suggest, the Chancellor must aim is far the most important: that is the restriction of consumption at the present time. The Chancellor has seen fit to aim at two of these birds. I must admit that I am not confident that his aim can be so superbly good that he can achieve both these


results. I cannot help wishing that, at this particular juncture, he had put first things first, and concentrated on restricting consumption, thereby defeating the menace of inflation. What the Chancellor has actually done has been to release fresh purchasing power amounting to £315,000,000. He has done comparatively little to stimulate further production. He has made a comparatively small reduction in E.P.T., and I would ask him why, if he looks at these matters from a modern attitude, he should keep that tax at all. What effect can that have on consumption? It does not help us there in any way. I cannot see what object that tax performs except to discourage production, which is a vital objective in these days.
I wish, too, when he was raising the allowances, he could have restored the earned-income allowance, because that seems to be the most obvious way to encourage incentive among those taxpayers. I feel, as I think was stated in "The Times" leading article to-day, that what the Chancellor has really done in raising these allowances is more a mitigation of hardship than an increase in general incentive. I entirely agree with the choice of those he wishes to help, from the point of view of equity and fairness. I think that those he relieves are those we should most want to relieve, and that the extra taxes are certainly placed on those who are most capable of paying them, but whether this will benefit the country in the long run, I am not so sure. I feel myself that the Chancellor has been torn between a duty to perform and a desire to please. We know that he has got a strong head, but I think that, on this occasion, his kind heart has been the dominating organ. I only hope that, in the years to come, the whole country and more particularly those he has tried to help to-day, will not wish that we had a sterner-hearted Chancellor of the Exchequer in 1945.
Of course, the real answer to all these difficulties is to increase the supply of goods. I would like to ask the Financial Secretary if he is really confident that we are making the conversion from war to peace as rapidly as we ought to, and as rapidly as we hear it is taking place in America, Canada and elsewhere. I am bound to say, from all the reports I can get, that there is a lack of vigour and

drive in Government action in this respect. I have felt for a long time how urgent was the question of releasing from the Forces men and women not engaged in vital work, because of the hardship entailed on them and on their relations. I feel that, in considering this Budget, that need is doubly strong, and that it is vitally necessary to get back at once, every skilled man who can possibly be spared, regardless of any other consequence It is absolutely vital for the resurrection of the trade of this country and foreign commerce and to provide the goods necessary to defeat inflation. I think that the Chancellor would think it a good stroke of business to sanction substantial increases in pay to those retained in the Forces, if that would enable us to get back at once the skilled men most urgently needed in the country now.
I hoped that the Chancellor would give us an estimate of what he considers are the total resources of the country—not what he can get for the Treasury—in goods and services available. It seems to me that some of the supporters of the Government, perhaps not in this House, think that a Socialist Government can, as is were, wave a magic wand and produce the resources for any desirable object. I am quite sure that the Chancellor would agree with me that we are absolutely limited by the men and material available. Of course there may well be a difference of opinion as to how these men and material can be made most productive. I am sure hon. Members on the other side of the Committee consider that the nationalisation policy of the Government will lead to greater national wealth; whereas we on this side may perhaps think it unfortunate that the Government should have given way to the views, which, in my opinion, are old-fashioned, of some of their followers in adopting a nationalisation policy, which, I suggest, will severely handicap the Government in their great task of production, and raising the standard of living. That is a matter of opinion on which we shall disagree. Where we can agree is that nationalisation by itself is not going to produce any magical results. It can only increase the resources of the country if it brings about conditions where management is more enterprising and efficient, where men work harder, and where the equipment of the factories is better. Only if it does that can it possibly produce greater wealth.
Where do we stand at the moment? In 1938 the total expenditure by the public on consumer goods was round about £3,600,000,000. The total expenditure by the State and public authorities on real resources—I am not talking about transfer payments—was £940,000,000, and expenditure on capital re-equipment was £345,000,000. In that year we only met the balance between expenditure by the public and the State, and on capital equipment on the one side, and actual resources on the other by selling £70,000,000 worth of foreign investments. That is a thing which it is not quite so easy to do today. Therefore, I do feel, assessing the position now, that we ought to make, and I wish the Chancellor could give us, some calculations of what the national income may be in the first normal year. We can expect an increase over 1938, because the economic knowledge which we have now acquired should, I think, enable us to get over the slumps to which we have been accustomed in the past, and have something resembling full employment. That will be offset, if there is any substantial reduction in the hours of work. I think we all want to see shorter hours of work, but I question whether this is not premature at this time. If the hours of work were reduced to 40 hours a week, I calculate that the loss in national resources would be greater than if every unemployed man in 1938 were back at work. Then we can truly expect substantial increases owing to new inventions and better technical equipment. But against that we may well lose in regard to the "terms of trade."
Most of what we sell is manufactured goods, and a great deal of what we buy is raw material. In a sellers' market, we have to pay more in terms of what we sell in order to get what we want to buy. It would seem to be a fairly optimistic guess that we may increase the 1938 national income by 20 per cent. which is about £1,000,000,000. If that is the case, how is that going to be divided between the great demands for increased consumption. It must be remembered that in 1938 there was unemployment. These men are now in employment and they will want to spend. There has been a great transfer of wealth to those with smaller incomes—that is from those who save to those who spend. There has been accumulated about £8,000,000,000 of savings during the war, some of which people

want to spend. It is going to be a big job to keep consumption down even to the 1938 level, and that does not allow much for extra State expenditure and for re-equipping the country, which we all agree is so vital. In view of the impetus which the Budget must give to spending, I feel that if inflation is to be avoided, there has to be either a drastic temporary reduction in expenditure by the State, or we have to face an extension of rationing, and a lengthening of queues or else a disastrous loss of capital for the re-establishment of capital equipment in this country. I am sure the Committee would agree that should be the very last matter in which we should economise. "The Times" put it very well yesterday:
To-morrow's output, not to-day's consumption, will determine the future of the country.
I understand that the Chancellor in his broadcast last night, which I am sorry to say I did not hear, hinted at concessions in indirect taxation in his next Budget. I would like to ask him to draw a distinction between indirect taxation which is avoidable, and that which is unavoidable. At the present time, I think that about three-quarters of the indirect taxation is what—anyway those of us who are non-smokers would say is avoidable. When taxation is on sugar and tea it is on necessities, and it is a most regressive tax, and I would welcome all the reduction he can possibly make. But I think there is a big distinction between those taxes which are more or less unavoidable without hardship, and those where reduction of expenditure is within the power of the consumer.
In the beginning of my remarks, which I am afraid have gone on all too long, I referred to our position as a debtor country. I said that we had lost vast assets and had vast commitments here and abroad. I do not want to end on too gloomy a note, but I do not think there is any call for excessive pessimism. I believe we have gained great opportunities which may more than outweigh those assets that have been lost. We have made great advances in technical knowledge, and there is an immense advance in our economic knowledge. But we can only take advantage of these opportunities by very hard thinking and planning by our rulers and hard work by the people of this country. A very heavy


responsibility will rest on the shoulders of the Chancellor, and I feel that, regardless of party, we all ought to wish him at this juncture success in his great task.

5.45 p.m.

Mr. Clement Davies: Before I speak about the Budget, may I take this opportunity of adding my congratulations to the hon. Member for Huddersfield (Mr. Mallalieu) on his maiden speech. Some of us have very happy recollections of those great days when his father was here, and I would like to say with what real emotion I listened to his eloquent, thoughtful and sincere speech. I am looking forward to more contributions from him. As one who still adheres to the old Radical faith in which he was brought up I wish also to endorse the advice and warning he gave to the Treasury Bench. I only wish there had been a fuller Committee to hear the sincere utterances of the hon. Member.
With regard to the Budget, I begin by adding my congratulations to those which have showered on the head of the Chancellor of the Exchequer. I am not sure what his own feelings may be this afternoon, and whether they are not now rather mixed. The speech of endorsement by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) makes me wonder whether his Budget is really on the right lines or not. But I sincerely congratulate him on his presentation of his Budget yesterday. It has been my good fortune, or otherwise, to hear many a Budget statement from the Floor of this House or from the Gallery of the House. Never have I heard one made more clearly, lucidly and simply than that of the right hon. Gentleman. It was also masterly. It was, of course, an interim Budget. It was not that full statement, such as, I hope, we shall get when he presents his Budget next April. I only wish he had gone a little deeper into the Government policy, and not merely contented himself with giving what I might call an accountant's pro forma statement of the figures on either side.
The right hon. Gentleman departed from precedent, and rightly so, in foretelling what he proposes to do, not on Budget day but some months ahead. That is right. It is not good policy nowadays to give people jolts and jerks. Let them

be warned as much as possible for as long as possible about what lies ahead so that they can make their arrangements accordingly. The main feature, of course, was the drop in the Income Tax and—it comes to the same thing—the increase in the allowances. It is right from many points of view to ease the burden upon the shoulders which are weakest. But, in addition to that, it will undoubtedly give an incentive and so, from both those points of view, it is right. The Chancellor is really releasing some £90,000,000 more purchasing power to the community. There would have been danger in that, owing to our great shortage of supplies, if he had not proceeded to emphasise, and rightly so, his determination to maintain controls. We heard nothing to-day, as we did during the Election, about getting rid of those controls. In fact all that we heard was the very strongest approval and endorsement of what the Chancellor stated, both with regard to prices and strict rationing. These must be maintained; otherwise we might get into that dangerous state of inflation.
The Excess Profits Tax is, except in time of war, a very bad thing. It offends against every canon of taxation. In time of war, it was absolutely justified, as there is something repulsive in people being allowed to make what one might call blood money. That is why, when it was introduced, all of us in the old House were in favour of it. But as the Chancellor must admit, as time went on it had repercussions which it would not have had if the period of the war and the period of the tax had been shorter. It has worked unfairly because some who have had a hard struggle, or who were just beginning to get into production when the war broke out, had a low standard, and have been penalised accordingly. On the other hand, some were getting on to quite a high standard, and some were doing so by producing and exporting to Germany goods which were needed for war purposes. It is an unfair tax. It also means that there are no reserves with which to rehabilitate plant and machinery. Very rightly the Chancellor proposes a reduction, but he frankly confesses that he has not made up his mind finally in regard to the tax. May I very humbly suggest that his best course would be to do away with it altogether. He could not afford to lose all the money it brings


in, and he has to think out some other tax. I have a suggestion to make which might appeal to the Chancellor, because he was very anxious yesterday about how this 40 per cent. now being released will be utilised; he was very anxious that it should not be used merely for presents in dividends to shareholders, but put back, "ploughed in" again, in plant and machinery. Might I suggest consideration of a tax on excess dividends, rising rather steeply?

Mr. Gallacher: Would the hon. and learned Member recommend and support the first National Defence Contribution which was introduced by the late Neville Chamberlain? You will not get a better or fairer tax. That is why the City condemned it.

Mr. Davies: The hon. Member will remember that I was the first to attack it.

Mr. Gallacher: I was its only supporter.

Mr. Davies: I think the hon. Member was, because we had the extraordinary spectacle of the Chancellor of the Exchequer who had introduced that tax, standing at that Box when he had become Prime Minister, and saying it was a bad tax. It was a tax which, if carried to its logical conclusion, would have been stultifying to production. Surely no one wants it.
I expected the Chancellor to tell us more about Government policy with regard to finance. The sooner we know about this, the better for everybody, better from the Government's point of view, and from the individual point of view, and especially from the nation's point of view. I regard the position of the Chancellor of the Exchequer to-day as having altered. Prior to this war he conceived his position as being that of merely the banker of Government Departments. Our view of the Chancellor is changing. We are coming to regard him as a trustee for the nation. One therefore wants to know how he proposes to direct and guide finance. The nationalisation of the Bank of England, which we on these Benches will support, will accomplish little, and everybody realises that. What we need is a picture of the national wealth, how it is created, where it is created, and, on the other side, the national expenditure

and how that money is being spent. That expenditure goes down three channels. The first is the Government's own channel, for governmental purposes, the second is private consumption and the third is capital investment. During the war, the main part of the expenditure has been down the channel of the Government. Private consumption has been strictly regularised and kept within control as much as possible. The one which has suffered has been capital investment, and that is the one which will be of the greatest immediate importance. That is after six years of war.
Before I deal further with that point I wish to emphasise why I feel it necessary for the Chancellor to broaden his statement, taking this Committee and the country into his confidence. It has become almost a truism to-day to speak of a revolution in ideologies that has been going on throughout the world. Undoubtedly that revolution has been going on steadily over the last half century, and is still going on. The war itself was the grim, horrible, outward manifestation of it. But although the military war is ended, no one knows and realises better than the Chancellor that the war against inequalities, injustice and poverty still goes on not only in this country but the world over. We all know through figures and statements carefully vouched for, and given to us by the right hon. Member for the Scottish Universities, about the great number of people in this country who prior to the war lived below the poverty standard. I was very much struck the other day by a statement from America that as many as two-thirds of the people of the world live below the poverty line and have not enough to eat. So this war against poverty will still go on. There is suffering, not only in Europe, China and India but, in fact, throughout the world.
Great changes have been taking place during the last 50 years, but the greatest change of all has taken place in the last six years during the war. There has been a greater distribution of wealth during that six years, than ever before in the history of this country and the effect is the extraordinary one that, in spite of war, the health of the people of the country was never better than it is now because of the better distribution of the necessities of life. [An HON. MEMBER: "All due to control?"] I would ask


the Chancellor in this Interim Budget not merely to look at Government expenditure. All Budgets prior to the war merely looked at that portion of expenditure which the Government proposed to make during the year, and merely considered how the revenue to meet that expenditure should be raised. The doctrine of those days was that, of course, the Budget had to be balanced even to the last penny. We now realise—and I think that is what was in the Chancellor's mind when he talked about a five years' plan—that annual Budgets are futile. We are at the beginning of a new era where the Chancellor will have to consider a far wider prospect than mere Government expenditure. Government expenditure can affect, of course, the welfare and conditions of the community. It can help initiative, it can affect the enterprise of each individual. Hon. Members above the Gangway very often talk about more freedom for the individual, for his enterprise, initiative and so on. I wonder, do they realise that the period between the two wars did more to curb and stifle and smother private individual initiative than any period in war. The tendency was to have control in the hands of the few. There was little room for the smaller firms or individuals. No wonder that we had to deal with distressed areas. I look forward to the future—

Mr. Beverley Baxter: The hon. and learned Member is making this constantly reiterated accusation about the period between the two wars. We on this side admit that it had many bad features, but never in any similar period did the living conditions of the ordinary man advance to such a degree as they did in the period between the two wars. Is it not time that the Liberal Party left that slander to the Party opposite?

Mr. Davies: I am very glad I gave way. Never in the history of this country had we such a high percentage of unemployment. Never did we know such terrible distress among families. I wish I could take the hon. Member back to my country and down into the Rhondda Valley and Ebbw Vale to see the suffering there. It is a period of which I should have thought everyone would have been ashamed. That is what I mean when I say I look forward to the future much more optimistically.

Mr. Spearman: The hon. and learned Member referred to unemployment. Under which Government?

Mr. Davies: In the whole period. From the moment that the City fired its first shots in 1920, until the war broke out in I939.

Mr. Beverley Baxter: Is it not a fact, that owing to totalitarian experiments arising out of the tepid beginnings of Socialism in many countries, the whole world was upset, and all commerce and trade conditions were upset; and is it not a fact that only under the leadership of private enterprise, was this country able to maintain a higher standard of living than almost any other country in the world?

Mr. Davies: A higher standard of living for the people generally in this country was due to the war when there was distribution of food. I am glad that hon. Members have made these interruptions, because the circumstances of the period at the end of the last war and those of to-day are very similar. Hon. Members above the Gangway take a pessimistic view of the future. They stress the loss of investments abroad, the loss of our Merchant Fleet, the lack of machinery and the fact that a great number of people have been taken away from industry and have not yet been restored. They remind me of nothing so much as Rabelais' will, in which he said:
I owe much, I have nothing, I leave the rest to the poor.
Never was this country prior to to-day, as well off and as wealthy as it was when the war ended on November 11th, 1918. Never had it so much productive capacity, never so many factories, never so many trained men.

Mr. E. P. Smith (Ashford): Mr. E. P. Smith (Ashford) rose—

Mr. Davies: I have given way many times. You will tempt me to make the kind of lengthy speech which my great old leader, Mr. Lloyd George, would have made.

The Deputy-Chairman (Mr. Hubert Beaumont): I am not tempting the hon. and learned Member at all.

Mr. Davies: Never was the country so wealthy as it was at that time. Never were there so many trained men. The position is exactly the same to-day. Some


time in 1920, from the City came the message that expenditure was too great and the Geddes Axe was invented to cut down expenditure. Then began this period of unemployment and distress.

Lieut.-Commander Gurney Braithwaite: Who was Prime Minister then?

Mr. Davies: He was very much under the control of the Carlton Club.

Mr. Beverley Baxter: A Liberal Prime Minister.

Mr. Davies: And Tory people behind him. What I hope the Chancellor of the Exchequer will do is to guide and direct investment towards greater production. I was hoping we would hear from him yesterday that the Government themselves would encourage small firms, new enterprises and so on. The creation of a National Investment Board, I believe, is part of the policy not only of hon. and right hon. Gentlemen opposite, but of others. In that way we can get this country marching towards normal full production. When that happens, I can see this old country again flourishing and we need not take a pessimistic view of the future. There are many great things to be done. The Government will be undertaking tremendous tasks which will absorb much labour and a great amount of material. They will be nationalising the mines, nationalising transport, improving roads, and there are houses to be built. I would like to see them nationalising the mines—I have always said so. But with all that, must go side by side the development of the full productive capacity of the people of this country.
I often feel that an over-emphasis is placed upon exports. The right hon. Gentleman the Chancellor of the Exchequer informed us that, in the main, we were an importing country. We throw our ports open, and, he said, we buy from everyone, and our exports were paying for these imports and more than paying for them. I still think we can look on ourselves as being the finest customers of every country in the world, but we, above all, must set production going. There is plenty of new plant and new machinery. We want tooling up badly and when that is done I think we shall get a flourishing policy.

6.13 p.m.

Mr. Diamond: It is the custom in this House that, when a new boy rises to make his maiden speech—if I may mingle my genders—he should say with all due modesty that he requests the indulgence of the House. That is a custom to which I most gladly subscribe, and I shall need that indulgence in great measure. There is a further custom that he should also say how delighted he is to have caught your eye, Mr. Chairman. I have such a high regard for truth that I must beg to be allowed not to follow that custom. Rather am I reminded of that ancient Chinese proverb which says—if I may, with deference to hon. Members, translate it straight into the English language:
Beware what request you make, lest it be granted.
My feelings are not entirely unpleasant, as might easily be the case. I am very conscious that I am enjoying that anticipatory pleasure which that other idiot enjoyed when he was banging his head on a wall. He said that it would be so nice when he stopped doing it.
In my profession I have fought the Inland Revenue hard for many years, and I find it a little difficult and unusual to realise that the Chancellor of the Exchequer is now on my side—at all events, we are both on the same side. Of course, we now have a very different Chancellor of the Exchequer. No-one who had the privilege of listening to the Budget speech yesterday could doubt the breadth of vision and the wide sweep of the present Chancellor. We can, for example, boil and freeze, completely freed from Purchase Tax. Is it open to anyone to doubt any longer that my right hon. Friend is full of the milk of human kindness? I would go further. Is it not plain to every hon. Member that my right hon. Friend takes most practical steps to replenish that store as often as occasion arises? In those circumstances I beg to offer one or two very ordinary suggestions and remarks to the Chancellor of the Exchequer.
The first point with which I want to deal is that of the unearned income relief. As I sat listening to the very lucid speech of my right hon. Friend yesterday, I was astonished to find that the logic of his argument, as it appeared to me, was not carried to the full. I am referring, of course, to post war credits, which I have


always understood to be in the form of an enforced loan—a very suitable measure—from the taxpayer. It was a system by which the Revenue said to the taxpayer: "You pay what you should pay, and in addition you pay a little more, which we shall return to you in due course." The calculation of the amount of that post-war credit, as hon. Members will be aware, is shown quite clearly on the back of each post-war credit certificate. Everybody will know that the first item in calculating post-war credits is the difference between earned income relief at the pre-1941–2 rate and the earned income relief at the rate calculated on that form. The logic of the situation, as it appeared to me, was that if one is getting back to what the Chancellor was good enough to call pre-war allowances, but which the post-war credit certificate only refers to as the "pre-1941–2 allowances," one should do more than deal with personal allowances; one should also deal with earned income relief, or one is not entirely completing the logical argument.
I say with all deference that the earned income allowance should have been brought back to, at least, the rate of one-sixth at which it stood before the post war credits started or, if one is going to the pre-war rate, it should have come back, so far as my recollection goes, to one-fifth. If I am not exceeding the bounds of controversy, or of the caution which members of my profession use in certifying figures, I think it is right to say that one-fifth is approximately twice one-tenth. That is purely a mathematical calculation, but it did seem to me that it was good Socialism that one should distinguish, especially to-day, between earned income and unearned income.
I am, therefore, asking the Chancellor to be good enough to give this matter further thought. It is not a case, as I can well appreciate, of there being an opportunity to deal with this matter in the next Budget, inasmuch as Pay-as-you-earn will have to be re-coded and recalculated between now and next April, and anything which affects earned income relief, will have to be dealt with now, and not in the next Budget, if it is to have effect prior to 1947–48. I imagine—I know—that the Chancellor of the Exchequer has taken steps to cover the whole orbit of taxation and I imagine that he has

considered the position in relation to earned income relief. No doubt he has also considered the position of the old-age pensioner and people in that category who rely upon a small amount of unearned income. In the age allowance, account is taken of that of course, but it did seem to me that I might, with deference, ask the Chancellor to be good enough to look into that point once more.
The next point on which I wish to touch is the much debated point of Excess Profits Tax. I have only one small suggestion to put to the Chancellor with regard to it, and that is that he should abolish it altogether, for two reasons. In the first place, again the logic of the situation impresses itself upon me. The Excess Profits Tax was described by the Chancellor himself as an appropriate tax for a short war. It has now got to the stage where it ceases very largely to appear to be equitable so far as the taxpayer is concerned. I am quite sure that it is not beyond the ability of the Chancellor and his advisers to devise a tax which would be equitable, will appear to the taxpayer to be equitable, and will produce to the Revenue the same amount that Excess Profits Tax would be likely to produce in future without any difficulty whatsoever.
The second reason why I was disappointed not to hear that E.P.T. is to be removed is that I imagine, from my limited experience, that it will be the sort of tax which will produce very little in the immediate future because of the tremendous reduction of war contracts and war profits. I do, of course, realise that the Treasury has information which is far in excess of that which the ordinary citizen can come by, but perhaps, dealing with the accounts of businesses, I do get at that level information a little earlier than it reaches the Revenue who, after all, only get the answer when the balance sheet reaches the Inspector of Taxes. Then there is the matter of deficiencies. The Chancellor was good enough to give to businessmen of every grade of morality a very full warning that he was going to continue to allow deficiencies to be taken into account as long ahead as 31st December, 1946. He was thus inviting businessment of every grade of morality, to protect themselves as they might think fit. When I saw it reported in one newspaper to-day—or rather misreported—that the Chancellor was referring to "efficiency"


payments, I am not sure that it was misreporting but rather the cynicism of the reporter.
The next point I would like to touch on in regard to this tax is the refund of 20 per cent. It has already been mentioned that it will be extremely difficult to arrange this refund in the desirable manner. This is a case where, I think, if I were on the other side I should have the better end of the stick than the Chancellor or the Revenue. I hope, therefore, that, irrespective of what measure is designed in the Finance Act, the Chancellor will make it perfectly plain that, repugnant as dealing with taxation retrospectively is to the sense of fairness of every Member, he will, if there is any substantial measure of avoiding the intentions and spirit of the refund, introduce retrospective legislation to put the matter right in accordance with what is intended on all sides of the Committee. It might not be inappropriate at this moment to refer the Chancellor, when he deals with the business world, as he will have to do in the near future, to the rules of the road as they appear in the central police station in Tokio. They are in English, or, at any rate, in the English which can only be found in the central police station in Tokio. One of the rules reads:
When a passenger of the foot heave in sight, tootle the horn; trumpet at him melodiously at first, but if he still obstacles your passage, tootle him with vigour.
That seems to me not entirely inappropriate.
The terminal payments in connection with the cancellation of war contracts is a matter which, I imagine, concerns the spending Departments more closely than the Chancellor, but it is a matter in which he is deeply interested. I hope he will take great care to see that his view is clearly expressed to the spending Departments that the claims for cancellation of contracts should be examined with scrupulous care. It is extraordinary to find, as soon as a contract is cancelled, how completely valueless the partly manufactured articles are made to appear, in spite of the fact that an enormous value in labour and material has gone into them. If I may make a small suggestion, it is that payments on account should be made for the time being to give the contractor the opportunity of carrying on with his business, but that no final pay-

ments should be made until the machinery which already exists is used to the full, to make sure that there has been no excess spending of the nation's money on this purpose.
That is all I have to say about the Budget, but I would like to crave your special indulgence to make a personal statement. This House means a tremendous amount to me. It signifies freedom and it signifies all those things for which the Armed Forces have been fighting. As one who was not called upon to fight in His Majesty's Forces I appreciate the service and sacrifice they have made so that freedom could live and so that it could be possible for an ordinary citizen like myself to get up and address the Chancellor at such close quarters. For those who have come back, I hope that I shall never be found lacking in energy to pursue their just causes. For those who unfortunately will not return, I hope that I may do my share in seeing that it may be truthfully said of them that they fought in the last of the wars.

6.31 p.m.

Mr. John R. Thomas: If I had been six months ago in the jungles of Africa and had not heard of the General Election, but had a radio and listened to the Budget speech, and if anyone had asked me whether it was a Conservative, a Liberal or a Labour Budget, I should have had to think for some time. I would have said, "There is no mention of food taxes or indirect taxes, so it cannot be a Liberal Budget." Then I would have recollected that there were to be some adjustments in Income Tax and Surtax, and I would have asked myself, "Who is benefiting?" I would have found that the advantage of this surplus is going, not to the lower grades, but to the Surtax payers. I would, therefore, obviously have concluded that it was a Conservative Budget.
I am sorry to have to stand here on this side of the Committee and ask what benefit the lower paid classes are getting from this Budget. I am thinking of the agricultural worker. It was the agricultural worker and the miner who sent me here, and I should feel that I was betraying my trust if I did not go a little further into the question of taxation relief. I do not think that the published Schedules showing the differences between the exist-


ing tax and the tax payable under the new rate take into account the post-war credits. If that is so, there is little to be gained from the change by those with an income of under £500 a year. On the other hand, a married man with an income of £5,000 a year stands to gain £150 per annum. I can only conclude, in the old Biblical phrase, that "unto him that hath shall be given."
It was not however on this subject in particular that I wanted to ask for the indulgence of the Committee. I wished to refer to indirect taxation, which in previous Debates has been treated with a certain amount of levity always. In the year that I was born the then Chancellor of the Exchequer said that the indirect taxpayer of this country was very moderately burdened, indeed he was very lightly burdened, if he neither smokes nor drinks. But man lives not by bread alone. I am referring to three indirect taxes which I believe primarily affect the working classes of this country, namely, the beer, tobacco and entertainments taxes. [An Hon. Member: "What about whisky?"] The person who can afford whisky in these days, is certainly not the working-class man whom I am here to represent. The total sum collected for these three duties in the year 1944–45, according to the latest estimates, amounted to no less a sum than £700,000,000. That is equal to over half the amount collected from Income Tax, one and a half times the amount collected from E.P.T., six and a half times the amount from Estate Duty and—note this—ten times the amount received from Surtax. An hon. Member opposite referred to motor taxation as a major problem in this Budget, but the £700,000,000 represents no less than 25 times the amount received from motor taxation.
How does this affect the individual? I have worked out the estimated Budget of a married man with two children earning £5 per week. I am proposing to allow him and his family one visit to the pictures per week, one pint of beer per day for both him and his wife. [An Hon. Member: "Too low."] I am glad to know that is a modest estimate because I purposely want to keep my figures low—and 20 cigarettes a day between them. That represents a payment of about 17s. 6d. per week or £45 per year in these

three indirect taxes, equal to no less than nine weeks' wages per annum. One hundred years ago, agricultural workers and other workers whose weekly income was 13s. 2d. per week, on which they had to keep a wife and perhaps four children, paid in indirect taxation—which in those days included food—an amount equal to three and a half weeks' wages. To-day it amounts to no less than nine weeks' wages, which, expressed in another form, is equal to something like 3s. 4d. in the £ indirect taxation. A man with £1,500 a year, allowing a slightly higher estimate for his modest amenities, would pay indirect taxes of is in the £, and as we go up the scale of income and reach the Surtax stages, the incidence of indirect taxation is almost negligible.
I was shocked indeed to find that this Labour Budget did not follow the lines of the first Labour Budget. The then Government were not in the position of having a majority, but even so a remission of indirect taxation was made to the extent, I believe, of something like £28,000,000. I do not think that any relaxation of indirect taxes to-day could possibly lead to inflation. The reason is that one cannot consume more beer to-day, one cannot get more cigarettes, because they also are in short supply. There is no justification for these taxes on moral grounds. I would not expect, and nobody could expect, the Chancellor to make any drastic modifications in this particular Budget, but I was hoping for a gesture from him to the indirect taxpayers. I was hoping that in his programme we should get some encouragement to think that the lot of the indirect taxpayer would be relieved eventually. Indirect taxes—and this was a statement made in a famous journal read, I believe, by most hon. Members on the other side:
Indirect taxes are contrary to social justice because they have to be paid irrespective of income, that is, they weigh much more heavily on those least able to afford them.
I would commend to the Chancellor of the Exchequer, not as an interim measure, but for consideration in connection with his long-term policy, the advisability of some measure whereby indirect taxation could be gradually lifted and transferred to the direct taxpayer. The only just method of payment of tax is not according to this or that theory, but on the basis of annual income. What I suggest to the Chancellor is that over a


period, as surpluses become available, there should be some change of policy so that the electors whom I primarily represent will get a measure of relief far greater than they have got in this interim Budget.

6.46 p.m.

Mr. Norman Bower: Before I make one or two less popular remarks, I wish to congratulate the hon. Member for Blackley (Mr. Diamond) and the hon. Member for Dover (Mr. J. K. Thomas) on their most admirable and successful maiden speeches. Both of them displayed fluency and sincerity, and the hon. Member for Blackley particularly showed himself to be a master of his subject. I am sure the Committee will agree with me that both hon. Members emerged most successfully from the ordeal which all of us have to face at some time or other, just as surely as we have to face death itself, although nobody knows which is the worse. We shall look forward to hearing the hon. Members in future.
With regard to the main structure of the Budget and the Chancellor's long-term financial plan, with the emphasis which he laid upon balancing the Budget in future over a period of years rather than of taking each year individually, and of having a deficit in bad times and a surplus in good times, in accordance with the policy of the White Paper on Employment, I have absolutely no quarrel. I think it is a perfectly sound and admirable exposition of what our long-term financial policy ought to be in future.
There are two points of criticism that I want to make with regard to the Budget. I do not think the first will be a particularly popular thing to say from an electoral point of view, but nevertheless it ought to be said. It is this. Unlike the Chancellor and my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson), I am not at all convinced that it is a wise thing at the present time to relieve as many as 2,000,000 people from all obligation to pay Income Tax and thus, in a period of steadily increasing social services, to remove from them all sense of responsibility for the level of national expenditure. I have always believed—and I believe more strongly than ever under present circumstances—that everybody, no matter how small his income, no matter how small the amount of taxation he pays, should pay something

in direct taxation, so that there shall always be a direct connection which he himself will be able easily to perceive between the amount which he pays and the amount which the nation spends. So far as wage earners are concerned, just the same as with other classes of the population, I think the payment of Income Tax cuts both ways.
In some cases it certainly may act as a deterrent. It may make people less willing to work over-time and put forward an extra effort, and it may therefore tend to reduce production; but in other cases—probably an equal number of cases—the payment of Income Tax will act as an incentive, and will make people work harder in order to earn the same income and thus cover their obligations and commitments. That is an argument which is often used by hon. Members opposite when it is a matter of taxing people in the higher income grades. It is an argument that has often been used in favour of raising the Income Tax or of not reducing it too much. I think that argument is equally applicable to people in the lower ranges of incomes. It seems to me that already there is a tendency, more particularly among supporters of the Party opposite, for people to be under the impression that in some way or other the Socialist Government will restore the country to prosperity while they just sit back and take it easy. I believe that the removal of this very large number of people from the obligation to pay Income Tax will rather accentuate that tendency.
I come now to the second point that I want to make. I am not altogether happy about the Chancellor's attitude towards savers and national savings. His attitude towards them seems to be very equivocal, to say the least, and on the whole he seems to have a distinct bias against people who save and invest their money. I think we are all inclined to be a bit equivocal in our attitude towards saving. When there are national savings weeks and we want people to produce the money, we make all sorts of appeals to their public-spirited and patriotic instincts; but then at a later time, when it is a matter of paying interest on the money that has been saved, we usually refer to the saver as a rentier, a word which I think has acquired in the minds of many people a rather anti-social and reprehensible significance. The Chancellor said


yesterday that saving would have to continue for a considerable number of years to come, and he made an appeal to people on that basis. It seems to me that saving in some form or another will always be necessary, and not only for the next few years. If my economics have not got very much out of date—which I freely admit they may have done—unless there is always some form of saving it is extremely difficult to see how the re-equipment of industry, which has to go on all the time, and which the Chancellor said, quite rightly, is vitally necessary at the present time, is to be financed.
I cannot feel that there was any real encouragement for the saver in the Chancellor's speech. In the first place, the right hon. Gentleman said that the long-term rate of interest is to be further reduced. That means that it will be virtually impossible in the future—it is practically impossible now—to live on income derived from savings; in future it will be absolutely impossible for people to do that. I do not deny for one moment that unnecessarily high rates are extravagant and wasteful, but we have to strike a reasonable balance in this matter and to realise that not all the vice is on one side and all the virtue on the other. In the second place, it seems to be the Chancellor's policy that whatever profits are made by industry, and whatever concessions are made in the way of reducing Excess Profits Tax or Income Tax, the profits must never on any account be used to benefit the shareholders or to increase their incomes. I think we have to make up our minds clearly and definitely as to what part the saver is to play in the future structure of society and what function we expect him to fulfil, and having made up our minds on that, if we do consider that he has an important part to play and an indispensible function to fulfil, we must give him sufficient incentive to enable him to play that part and to fulfil that function. I cannot feel that the Chancellor was very helpful in that respect in his Budget speech.

6.55 p.m.

Captain Richard Adams (Balham and Tooting): In rising to speak in this Committee for the first time, I wish to beg the indulgence of its Members, and I am sure that that indulgence will not be denied merely because it has been granted

so frequently during the past few weeks. I am particularly happy that I shall be able to speak on this occasion—the occasion of the first Budget presented by this Government. I have the honour to represent a constituency which forms part of the vast dormitory of South London, and I can tell hon. Members present that there was considerable rejoicing there last night, when the news came through of the recommendations made by the Chancellor. I hope this will be the first of a series of Budgets for the little man. I congratulate the Chancellor on listening, on this occasion, to the voices in the back streets of our towns and villages, instead of, as so often in the past Chancellors have listened, to the voices of the banking barons and men of big business. I can assure him that the rejoicing among those 2,000,000 workers who, during the war, had to bear that extra burden of taxation in addition to the hard work they put in in the factories and offices, will more than recompense the little sadness among a small group of Surtax-payers who may think they have not been so well treated.
I knew, before this Debate started, that the hon. Member for South Dorset (Viscount Hinchingbrooke) would not agree with the views expressed by the Chancellor on the need for continued savings. I was, therefore, very glad to note that a more august person, to wit, the right hon. Gentleman the Member for Woodford (Mr. Churchill), only as recently as Monday, gave his blessing to the intentions of the Chancellor. I would remind this Committee that the right hon. Gentleman said that one of the vices of capitalism is the unequal sharing of its blessings. This Budget has achieved, above all else, a lessening of the gap between extremes of incomes, and I am sure, if only for that reason, it will earn commendation throughout the country. I am not so happy about a further remark made by the right hon. Gentleman the Member for Woodford yesterday. He gave three causes of inflation in this country. I think we all agree about the first two, namely, the use of the printing press which has distinguished other countries in the past, and, secondly, the insufficiency of the supply of goods. Then he gave us his third reason—when a Government have to come and borrow thousands of millions of pounds. I sug-


gest that that is rather facile and general, and I can only conclude it was offered yesterday in that kind of way. I would remind members of this Committee that that is precisely what the Government had to do during this war, and that, despite the fact that it borrowed thousands of millions of pounds, it did succeed, largely as a result of its borrowing, in pegging down the cost of living to 131.
I would ask hon. Members to look more closely at this effect of borrowing because I think it is likely to be the essence of future Budgets on the part of the present Chancellor. I suggest that inasmuch as the Chancellor borrows out of income, the only effect that borrowing has is to transfer spending from one direction to another, and, inasmuch as it is a wise and sensible Government that is redirecting that expenditure, we can only conclude it will be to the social good. To the extent that that borrowing is for a long-term purpose, it will even have a deflationary tendency, and, at a time like this, when we all know there is not the supply of goods available, it is a good thing, not only through taxation, but also through borrowing, to defer that expenditure to a later stage. I am quite certain that, in the years to come, the money that is withdrawn from circulation through borrowing now will be used to greater advantage. Therefore, I hope that the Chancellor will continue that policy of borrowing.
I would remind hon. Members, too, that this is the first Labour Government with a real majority, and that it has entered office after six years of the devastation of war. It would be most improper to let money circulate freely at this time, since it could only have that inflationary tendency which we all desire to avoid. If the money which we borrowed is, as I am sure it will be, used for social and material reconstruction, then the advantage that will accrue will, I believe, be to the satisfaction even of hon. Members opposite, in the years to come. In that connection, I was particularly pleased to learn from the Chancellor that he does not propose, in the immediate future, to close the gap between income and expenditure because, once again, in my view, that would be a most unreasonable thing to do at present, or even for some years to come. No commercial concern attempts to balance its accounts every 12 months,

except on paper. In good times, it builds up reserves, in order to be able to pay a dividend when times are not so good. It has various ways and means open to it to create hidden reserves, and to depreciate its assets, so as to create those hidden reserves, against a more unfortunate future.
I suggest, therefore, it is the greatest concern to all that, when times are good, we should accumulate reserves, both obvious and hidden, and use them to steady our accounts when times are bad. Times are bad now, and are likely to be bad for a few years to come. Therefore, rather than close this gap, rather than present this year, or next, a set of accounts which look very nice on paper, I would encourage the Chancellor to continue to borrow, and to continue to leave that gap unclosed until, as a result of his wise expenditure, he can arrive at better times and can begin to accumulate further reserves
In conclusion, I am mindful that, on this first occasion, it is unwise to press too hardly on the indulgence of hon. Members, but I would like to end on a philosophical note, and take from its context a line of Shakespeare, and say of this Budget:
…it is twice blessed; it blesseth him that gives, and him that takes.
Even those who are asked to give in the form of Surtax have the satisfaction of knowing that they are giving for a good cause—I think even hon. and right hon. Gentlemen opposite will agree with me that it is in a good cause—and, incidentally, of knowing that, in many instances, they are likely to get some money back through the reduction of Excess Profits Tax. I would say to that gloomy individual who glances morosely round his baronial hall, wondering how he is going to make do on a mere £5,000 or £10,000 a year, because of his extreme position, to be of good cheer because soon, and very soon, the Government are going to relieve him of much of his worry and responsibility.
The Government are going to relieve him of that worry and responsibility that attaches to his Bank of England stock and his mining shares, and the heavy burden of the broad acres that surround his ancestral hall, and, what is most probable, they are even likely to make provision for him in that grand scheme of National


Insurance which is now in preparation. Likewise I would also bid the little man in the street to be of good cheer, because I am sure that these concessions which have provided so much rejoicing and happiness to-day reflect but a tiny gleam of that splendid future to which we are all stepping forward together, that new era, the era of the common man.

7.7 p.m.

Lieut.-Commander Gurney Braithwaite: I am sure that hon. Members on all benches of the Committee will be unanimous in expressing their congratulations to the hon. and gallant Gentleman who has just addressed us, on an extremely eloquent, successful, though not altogether non-provocative, maiden speech. I well remember, 14 years ago, making my first venture on my feet in the late Chamber on a Debate on the Budget Resolutions, and while listening to the hon. and gallant Gentleman I, in retrospect, wished that I could have been as successful then as he has been this evening. I am sure that whenever he catches the eye of the occupant of the Chair in future, he will be certain of a welcome and attention from all of us wherever we may sit in this Chamber.
The Chancellor, by the time he comes to reply to-morrow evening, will, I am sure, be weary of the spate of congratulations which has descended upon him, but at the risk of adding yet another small quota to what has already been said, may I congratulate him on an extremely fine Parliamentary performance yesterday? I entirely agree with what has already been said. In my time I have not heard a Budget statement more successfully delivered. The right hon. Gentleman has many forensic attributes. The two which I would select are, audibility and emphasis, both extremely desirable, and I would only say that I enjoyed the Budget speech quite as much as the right hon. Gentleman enjoyed himself in delivering it. I cannot offer higher praise than that. So successful was the right hon. Gentleman in his oratorical effort that I thought he concealed with great success, by adding what I would describe as the sauce piquante Dalton, the Snowden flavour which proved so unpalatable many years ago and which persists in some respect in the proposals he has laid before us. The right hon. Gentleman

could not see the faces of some of his supporters. If he had, he would have seen a furrowed brow here and there at the path of financial rectitude he has selected on this occasion, and, indeed, the scene in the Cabinet must have been a little harassing. The genial countenance of the Lord Privy Seal must have lengthened as the Chancellor explained to him that £ s. d. are indeed symbols pregnant with meaning, and that inflation is a real live enemy on the doorstep rather than a figment existing in the imagination of wicked men in the City of London, that area where no standard bearer can be found to carry the flag of the Socialist Government in the by-election which is about to take place and to uphold the financial proposals of the right hon. Gentleman.
He announced his stern resistance to the danger of inflation and I am certain that on these benches he will have the strongest possible support in those efforts. Indeed, I would predict that before his allotted span has expired, he may be leaning with considerably more comfort on the buttress provided by the Tory Party than he will upon those who sit behind him. He may well be the victim of attacks from behind, one or two whispers of which have already been heard to-day. But this inflationary danger is no bogy. I suggest to the right hon. Gentleman that we are already slipping—we are defending as strongly as we can—in this respect but the purchasing value of the £ is, in fact, falling. Great efforts are being made to mitigate this course and the right hon. Gentleman declared, with the emphasis to which I referred just now, his intention of maintaining the cost-of-living subsidies, and went on to say that these have risen or are about to rise from £200,000,000 per annum to £300,000,000 per annum and he intends to protect the people from the consequences of the rise in prices, which is, in fact, taking place. With the best wills in the world, we are embarking on what is, in fact, camouflaged inflation. I do not think that any useful purpose is served by endeavouring to conceal that from ourselves. Inflation is here and it is a real danger.
The right hon. Gentleman set up what I believe is a record yesterday, certainly during my time in the House. I cannot remember a Budget statement in which the Chancellor addressed us for


the usual length of time without the words "beer" and "tobacco" once passing his lips. He has caused disappointment to another hon. Member, the hon. Member for Dover (Mr. J. R. Thomas) who delivered a successful maiden speech just now, I was very glad tohear—

Mr. J. R. Thomas: On a point of Order. That disappointment is not in regard to my consumption.

Lieut.-Commander Braithwaite: I do not think that that is a point of Order. I would have given way at once if the hon. Member had wished to correct what I said, but he did, as I understood him, put forward a claim on behalf of the indirect taxpayer for consideration in this Budget, and I was very glad to hear him say it. No one has done more to support the Revenue in time of war than that very excellent person the beer drinker, and also the consumer of tobacco and, in some ways, their conduct has been more patriotic because they have given their money to the Exchequer. They have not indulged in any savings campaign or in seeking any return of interest or in the building up of the necessary Sinking Fund. [An Hon. Member: "Drinking Fund?"] No, I said Sinking Fund. The consumers of all those articles have played a very fine part in supporting the Revenue during the war, but it was not on beer and tobacco that I wish to speak.
I understand that the right hon. Gentletleman broadcast last night, but I am sorry to say that I did not hear him. I preferred to listen to the right hon. Gentleman who sits on the bench in front of me, and who was speaking at the El Alamein dinner. The Chancellor, however, said that, while the indirect taxpayer had got nothing this time, he had hopes of alleviation on future occasions. Well, let us leave it there for the moment. There was another subject about which I was surprised. I thought that the first Labour Chancellor to face us in the full glory of power and majority would have had a good deal to say on the subject of tax evasion. I want to make a brief reference to that. I do not think it will be denied that there has been a great increase during the war years in tax evasion, nor do I hope that I shall rouse too much indignation if I say that the wider the area of control the greater the likelihood of black market operations. There is that tendency here at home, and I am sure I

shall carry the right hon. Gentleman with me, and it really is not good enough for the taxpayer of this country, to whom the right hon. Gentleman paid a well deserved tribute, whether indirect or direct taxpayer, who has shouldered his burden so manfully, that there should be this amount of tax evasion which is going on at this moment. There are transactions in cash—cash which is never banked, for the very excellent reason that the right hon. Gentleman's inspectors might become curious if too large balances were accumulated in banks of one sort or another.
I am going to make a suggestion. The right hon. Gentleman may say that it is quite impracticable. But this Committee is here for the purpose of making suggestions. Suppose the right hon. Gentleman were to announce that, as from, let us say, 1st January, 1946, the existing Treasury notes are no longer legal tender. Let him call in his Treasury notes. The Noble Lord reminds me that it has been done in other countries. One would have to exchange the present Treasury note for one of a different colour. I hope the right hon. Gentleman will not be deterred by the paper shortage or anything like that, from doing it, because I believe he would bring into operation machinery which would stop these wicked men and immediately send scuttling to their holes the rats who take advantage of the rest of us in this country. I leave it there. The right hon. Gentleman has his advisers, and I am sure that I carry him with me in the intention—

Mr. Dalton: Mr. Dalton indicated assent.

Lieut.-Commander Braithwaite: The right hon. Gentleman will be acclaimed by the whole country, if he will take some steps in that direction. At a moment when we are endeavouring to save a sum of £1,000,000 by sending vessels round Cape Horn to avoid the Panama Canal dues, how much richer a harvest there would be if the right hon. Gentleman put his finger on these very gross abuses. I want to put to the right hon. Gentleman two questions, which I hope he will welcome if only for the reason that I do not expect a reply in this Debate, and for two reasons. Much to my regret, it will be impossible for me to be in my place when the Financial Secretary replies to-night or when the Chancellor replies to-morrow, and, as I am not going to be


present, it would not be proper to ask for a reply across the floor of the House. Secondly, they are matters which, I am certain, will require some consideration and some time before a reply will be possible, and, when the right hon. Gentleman rises to-morrow, he will have a sufficient number of points to cover, and so perhaps I may content myself that a reply will come from one source or another in due time.
My first question refers to post-war credits. The right hon. Gentleman announced in his speech yesterday that post-war credits have now reached the formidable figure of £800,000,000.

Mr. Dalton: By the end of next March.

Lieut.-Commander Braithwaite: The right hon. Gentleman said he could hold out no hope of these credits being drawn, and he gave perfectly satisfactory reasons. To release this huge sum would be to endanger the whole framework of his financial policy. My question is this. When post-war credits were first introduced by the late Sir Kingsley Wood, I took part in the Debate and I asked whether I could have an undertaking that they, would not be used to be set off, let us say, against taxation. It might be just a piece of machinery for the Chancellor to say, "I have £800,000,000, and I propose to set it off against tax liability." I received a reply that evening from the men Financial Secretary, the right hon. and gallant Member for Gainsborough (Captain Crookshank), who gave an undertaking that these credits would, in fact, be paid in cash. I want to ask the Chancellor whether, under this Government, that undertaking still holds good, or whether some change has come over them.
My second question refers to capital issues. I gather that the Government are following very largely the policy of their predecessors in this respect. The right hon. Gentleman said that, I think, when speaking on the Debate on the Address. Obviously, the policy of the right hon. Gentleman at the moment, as I understand it, is for cheaper money rates and the building up of the gilt-edged market, presumably as a preliminary to the launching of some large Government loan. It would, possibly, be a loan to finance the housing of the people, and, for that reason, the right hon. Gentleman is

anxious to hold off market investment in other things. But the time will come when he will wish to divert investment from gilt-edged securities to industry. The remission of Excess Profits Tax, welcome as it is, is like patriotism, not enough. The time is coming when it should be necessary to have new capital issues, and the right hon. Gentleman has his machinery for the control of investment—a fearful bogy to some people, but it has, in fact, been operated for a long time through the Stock Exchange Capital Issues Committee.
Obviously, he is not going to allow the building of greyhound tracks in preference to industrial plants making goods for export. Will the Chancellor give some indication of when it will be possible to reopen the new issue market for industry under proper arrangements and control, and can he give us some indication of the priorities he has in mind? The first thing which springs to mind is that export industries should be first in the queue. Could the Chancellor give us some information on when that process is likely to start? I mention that, not with a desire to press capital issues upon him at this stage, but because, as he very well knows, plans have got to be made well in advance, with the preparations of prospectuses, underwriting arrangements and all the other things which take time, and, like everything else in this world, if notice can be given, it is in the interests of everybody concerned. Must industry wait for his proposed changes in company law before the Government are going to carry out the Cohen recommendations?
In conclusion, it struck me yesterday when the right hon. Gentleman was speaking that there is not really a case for an interim Budget at all, apart from the moral effect. The right hon. Gentleman has announced not jam to-morrow but jam next April. An interim Budget really becomes necessary for two or three reasons—some drastic fall in the estimated revenue, some sudden increase in expenditure such as the outbreak of war provided, some emergency which has upset the whole of the estimates of the normal April Budget. But that has not been the case. The right hon. Gentleman told us yesterday that the revenue estimates of his predecessor were approximately correct, taken over the 12 months


purview, and that the expenditure estimates were some few millions out—nothing very serious—so there is not really a case, as such, for an interim Budget at all. I am rather surprised that the Government, with such a heavy programme, is taking up the time of the House for that particular purpose, unless it be merely—

Mr. Jennings: Propaganda.

Lieut.-Commander Braithwaite: My hon. Friend says "propaganda"; I used the words "moral effect." I welcomed the speech of the right hon. Gentleman yesterday because I think it has definitely had a good moral effect in the country. It is quite true that a number of people, less informed perhaps than those in this Committee, imagine that the 1s. relief of Income Tax takes place forthwith, but jam to-morrow is a great deal better than no jam at all, and we shall see to it that there is not only jam in April but a larger helping too.

Captain Cecil Poole: I think the hon. and gallant Member will agree that it was understood by all Members of the Committee that the Budget introduced last April was purely a formal Budget, and that an interim Budget would have been introduced whatever party had been returned at the polls. I think that was understood by the late Chancellor of the Exchequer—in fact an announcement to that effect was made in this Committee. Had the hon. and gallant Gentleman's party been successful at the polls, I think we should still have had an interim Budget, only then we should not have been told that it was for propaganda purposes.

Lieut.-Commander Braithwaite: The last thing I want to do is to get at cross-purposes with the hon. and gallant Gentleman. I did not describe it as a Budget for propaganda purposes; I have not said that for a moment. It is quite true that the previous Chancellor in April last said that circumstances might arise making it necessary to introduce an interim Budget. The point I was trying to make, which I think is legitimate, is that there is not that difference in the out-turn of the year—I think the Chancellor will agree with this—as originally envisaged, which might have been

expected. That is one point of criticism on this side of the House. There ought to be a considerable difference in the estimate of expenditure in the financial year ending on 31st March. It ought to be possible to bring in very considerable economies.
In the meantime this, as the right hon. Gentleman himself said, is the first instalment. We shall expect much greater and happier things from him in the Spring—a further easing of the taxpayer's burden—and I hope he will wield with a lusty arm the economy axe—not the Geddes axe but the Dalton axe. That in itself could do great things. The right hon. Gentleman has distinguished himself greatly. He has told us that we are living in critical and historical times, as indeed we all know. He has our good will on this side of the Committee in the task to which he has set himself, but I would again warn him of the pressure he will receive from his back benchers. When in trouble he can look in comfort across the Floor—as, indeed, he looked with comfort upon us before when we sat behind him not so very long ago. Finally I would say this: One day some historian will write the story of our times. How lamentable it would be if he had to relate that, 130 years after the victory of Waterloo, the financial battle of Britain was lost on the playing fields of Eton.

7.30 p.m.

Mr. Walter Fletcher: A maiden speech is always an occasion of great fear to the Member who is making it. We were told the other day that Members on this side produce synthetic fury; the fear I suffer from at the present time is very real and by no means synthetic. Indeed, there are three fears—the first is that I shall speak too long; the second is that I shall get well off the point; thirdly, that when I sit down I shall have said not one of the things I intended to say.
I had the honour during this war to serve under the Chancellor of the Exchequer when he was Minister of Economic Warfare. Then his task was the destruction of the economy of enemy countries, the breaking up in every way of the trade and industries, of their whole economic structure, and we all know that he made a great success of it. On the good old principle of the successful poacher being selected for gamekeeper, that is possibly the reason why he is now


Chancellor of the Exchequer, and we look upon him as the great support and buttress of our trades and industries in this country
I listened, as all new Members must have listened to their first Budget, with great care and also with astonishment at the ease and clarity with which a complicated case could be placed before this Committee by those with Parliamentary experience. I felt how very much the "new boy" has to learn before he can arrive at the point where he can present even the modest points of criticism he wishes to put over with clarity and vigour. I feel certain that, taking it by and large, the Budget which we have had presented to us must be acceptable in the main to everybody in the country. I have the honour to represent a working man's industrial constituency, Bury, in Lancashire which, for reasons I have not been able to fathom, abstained from the midsummer madness that overtook the rest of the country in early July. I feel that in that constituency—which has an unexcelled record for savings and for war effort—this Budget will be looked through carefully and approved by practically everybody. Naturally there will be questions raised, and my already considerable mail will be increased.
There was one thing absent from the Budget, however, I felt and that was charity. We are told in matters of charity that we must not let our right hand know what our left hand is doing. There is one thing about the Chancellor, however, which is absolutely certain—his right hand knows full well what his left hand is doing. When he presented us yesterday with a gift, which, at first sight, looked to be appetising and glittering, with a few seconds his left hand shot forward and took it away from us, leaving us rather worse off than when he started. I have only known one other individual who could do that with the same adroitness, ease, and grace and he must be known to a good many Members of this Committee who have travelled in the Middle East or in the East. He lives at Port Said and is known under the curious name of" Gully-Gully."
This Budget is a Budget of continuity; it was the natural follower-on of all the war Budgets that have gone before, and they were an admirable series of realistic

documents showing that the people of this country, when the position was put clearly and fairly before them, were capable and willing of every sacrifice. This Budget was, therefore, a commonsense follower-on from the previous one, but it has certain very definite differences and I would like to deal with one or two of them. On the question of Income Tax and Surtax, I have listened with interest to the sometimes hidden and sometimes open gibes that have been passed at the taxpayer and at the Surtax-payer.
I have often submitted in the House without protest, to being promoted from an ordinary business man to a robber in the city. When praise is being given, as it is, most deservedly and unstintingly, to the Savings Movement and to the savers of the country equal praise is due to the Income Tax and Surtax payer. On the whole they are the admiration and envy of every other country, and I would like to give one proof of that. Many years ago, just before the last war, I happened to see the dossier of an upright citizen of Paris who was at police headquarters. On the debit side there were these words:
Citoyen extraordinaire paye ses impots,
which meant that he was an extraordinary citizen, who paid his tax. Here, the record of our taxpayers is quite the opposite. There is less tax evasion and more willingness to meet the burdens of expenditure than anywhere else in the world. As an Income Tax and Surtax payer I do not in the least object to what the Chancellor proposed yesterday, with one proviso, which is that I want to see that I am getting good value for my money. I do not want to see money frittered away and wasted unnecessarily. The Chancellor objected very much to the use of the phrase, "Geddes Axe." An axe is used primarily to behead people, and when you behead them then they are no longer meat for the Chancellor. I propose a more up-to-date weapon than that. We on this side are often accused of not being willing or able to learn, but I suggest that on this occasion we can learn. The Chancellor's colleague, the President of the Board of Trade—whose efforts to take under the wing of his Ministry so many other functions prove that he has, at any rate, rather inflationist tendencies—has recently produced what he calls working


parties. The working party and the constitution of it has caused a certain amount of uneasiness in Lancashire and other places, but it certainly is a modern and up-to-date method by which the Government can overhaul industries and trades, and see whether they are functioning properly and helping the national effort. I think it would be a good thing if trade and industry and the taxpayers were to be allowed to form their own working parties for the overhaul of Ministries. That, I think, would be only fair. They would certainly have to start on the Chancellor's own Department, because I believe that too much Treasury control is one of the things that we must break down.
I am by no means against control; we all know how necessary it is in many ways, but those who have sat on Government committees know what happens. There will be a meeting, at which four or five Ministries are represented. There is only one predictable thing about such a committee, and that is that it will sit again. Towards the end of the meeting, when they are about to come to a conclusion a still, small, voice, more powerful than that of conscience itself, the voice of the Treasury official, will say, "I think this is a matter which I should refer to the Treasury because the public interest requires…"and so he goes on. We all know that speech. The matter is referred back to the Treasury, and in the end the forward looking policy which was being put forward is very often brought to nought. In the overhaul which has been promised by the Chancellor to save the maximum amount of taxpayers' money, and money which could be expended on social security and other purposes, we must see that too much Treasury control is not allowed.
On the question of controls, I believe we are suffering at the present time from an over correction of an agreed evil. The days when we had no controls certainly brought great harm in their train, but today we have swung too far in the other direction. One of the dangers is that other countries with fewer economic systems are going in the other direction. Fairly soon, we shall be arriving at the epoch when the cold, keen winds of competition will be blowing round us again and the zephyrs of international agreement and control will be lessened. There is already every sign of it. During the Recess I spent about a

fortnight in America, and the first headline I saw in a newspaper there read, "All curbs off by February." The American word, "curb," for control has an implication which was not lost on some of us.
I do not say that in this country, where we have not the same economy of surplus and plenty as they have in America, that is in any way possible, but they are going to be competitors throughout the world. If we believe that we in our economic sphere can exercise control, and not meet competition which will knock it out of its stride, then we are living in a fools' paradise. The chances of arriving at any good international system in trade, industry and commerce over the next few years cannot be regarded very optimistically. Whether on civil aviation or on matters of higher policy, with the best will in the world—and this is in existence between such Allies as America's and ours—it will be difficult to prevent those economies from taking divergent paths when, in Kipling's words, "The ties of common funk," are removed. That does not mean that there is enmity, but it does mean that there can be and will be commercial rivalry. When I was in China I saw from a distance how these different economies are working, and I believe that too great a belief in the result of our control systems, as they have been put before us, is very dangerous. I am not certain that the patron saint of the Government is not King Canute. You will remember that King Canute, surrounded, as are the Government, by a certain number of flatterers, was persuaded that he controlled the tides. He got his feet wet. The Government start with the advantage that a great many of their ideas are "wet" before they begin and we greatly fear that the strong irresistible tide of economic truth and forces will drown them, which will be a matter of infinite regret to everybody on this side of the House.
There is another point to which I would like to refer. Invisible exports are hardly ever mentioned when the word, "export," is used. We are obviously in a period when this country will be hard put to compete in the world by the export of goods. We have heard much of the difficulties in getting our own machinery going again. There is no harm in admitting it; it is due to the fact that our


country made a total war effort from the first day of the war to the last.
We are still paying for it now and we shall have to continue to pay for it. What we can do, however, is to increase, and keep an eye on, our invisible exports. They are largely connected with the fact that this country has been for many years the centre of the world's confidence in shipping, insurance, storage, banking and open markets dealing with commodities. I believe, with the sacrifices we have made, of our immense revenue, and, above all, our good standing, we can build up our export in goods later; I plead with the Chancellor of the Exchequer, therefore, to keep an eye on those who will try, in due course, to sacrifice one of the greatest assets which we have. In a balance sheet there is very often the word "goodwill," and it is highly valued. It is hard to describe it. It is often the greatest asset in any business, and, over many centuries, goodwill has been built up in this country, and should not be lightly thrown away.
The word "inflation" appears frequently in this Debate and in others, and I would very much like to have a real definition of it. I have seen it in many countries. I have even seen what must be a joy to any economist, "inflation within a vacuum." In China there was no contact with the outside world, and yet enormous inflation took place. There is a great deal of mistaken thought and lack of knowledge on the difference between inflation and depreciation due to visible and preventible causes. There is never in the public eye the fear of inflation if one thing is present: Any inflation due to honourable causes, such as ours, cannot harm a country badly so long as the people of the country themselves retain their faith in their own currency. In this country, I believe, it is the desire of everybody to defend and continue their belief in the currency of this country, because without that, all our plans must come to naught. There is one role which the Chancellor of the Exchequer has to play which is of great importance. He is the curator of the purse of the country—of the public purse. Occasionally that function cuts across an even higher one—that of the curator of public honour. Far too often on the question of claims by members of the public against Government Departments there is a sharpness in deal-

ing, an unwillingness to take the part of equity, a willingness to hide behind a small legal point that I would like to condemn.
I believe that more important than anything else is the care of the public honour, and it must take precedence of the public purse. Very often the most humble members of communities are not in a position to know how to pursue their claim. They are bewildered by the difficulties, and even when it is explained to them they often do not understand it fully. I earnestly request the Chancellor of the Exchequer to see that in all these things he puts equity above law and reasonable generosity to those who have suffered during the war above any attempt to save what in the aggregate is little compared with the size of Budgets nowadays.
This Debate, I think, will go down to history as the "amber light" Debate. We on this side of the Committee are not certain whether it is not rather like a good deal of the legislation that has been put forward: it looks perfectly all right on the surface, but it has a catch in it somewhere, whether it is the Bank of England Bill with one odd Clause, the extension of control powers from two years to five with no adequate explanation. It is certainly a good Budget on its own merits, but taken against the background of other legislation it is, I think, the "amber light." We shall not know until April whether it is turning to red or turning to green. Until then I think we must give it a fair trial and do everything in our power to persuade our constituents that it should be respected as an honest and admirable effort to get out of the difficulties of war-time finance into the possibly equally difficult but different period of peace-time finance.
During the war this country only started to do well when the three Services worked together in "combined ops." When the Services worked in water-tight compartments, victories were small and costly. I believed that lesson of "combined ops" must be brought into trade and industry in this country. Capital, labour and management must work together—the cement that will hold them together is finance, and I feel that in the Chancellor of the Exchequer in the lead which he has given us we certainly have a workman who is doing his best in the public interest.

7.52 p.m.

Wing-Commander Millington: It is a very great pleasure to follow the hon. Member for Bury (Mr. Fletcher). Listening to him, we heard him ask why his constituency failed to follow the general mid-summer madness that swept throughout the country on 5th July. I venture to suggest that he has shown us to-day one of the very strong reasons why he has been returned for that constituency. I have not made very many speeches in this House—this is only the third or fourth—but for us to have a maiden speech from a new Member who has the weight of information and experience that he has, and at least one quotation means that whenever he gets to his feet again we shall all listen with great attention, knowing that we shall get entertainment and knowledge from what he has to say.
I find that I, too, have to make a quotation before I can get down to the substance of what I have to say in this Debate. We have heard one quotation from Japan, one from China, two from France, and one or two from England, but the one I have to make is a Latin quotation: "Timeo Danaos et dona ferentes," which means "I fear the Tories when they congratulate me." Were I in the position of the Chancellor of the Exchequer I would have been filled with horror and amazement when, after introducing my first Socialist Budget, with full Socialist support in the House, the right hon. Gentleman the Leader of the Opposition got up and said: "This is a Bill which can do no harm, even though it can do no good," and if I were to listen in the next two days to speech after speech from my confirmed political enemies saying, "This is a magnificent piece of work; we will give it all the support we can, and we will even go back to our constituencies and try to persuade those who voted for us to give it their support," I would be most alarmed.
I want to dissociate myself to some extent from the general atmosphere of congratulation which has surrounded the right hon. Gentleman the Chancellor of the Exchequer. I feel that he has given us a suave, smooth exposition of his Budget statement which has been easy for hon. Members to follow. I was intrigued at the cat-and-mouse technique with which he dangled something in front of

the eyes, particularly of hon. Gentlemen of the Party above the Gangway here, and' then snatched it back again—a very fine feat of forensic and histrionic skill. I should have felt that this was an opportunity for which the Labour and Socialist movement in this country have been waiting—for a broad statement of the attitude towards money and finance which is held by Members of His Majesty's Government and by the Members on the benches behind them, and that we could have had perhaps a little more philosophy and perhaps a little less accountancy. I do not want to comment or criticise too much, but particularly on the income side he should have supported the claims of Socialist thought and should, as one hon. Member making his maiden speech declared, have rebutted the claims of our opponents that there is any moral right contingent upon having a rich father. Yet the first Socialist Budget, albeit an interim Budget, does not touch the Death Duty at all.
It is on the broader field, on the way in which money is to be used, that I wish to ask one or two questions. First of all, the Chancellor has been asked many questions during the last few weeks, and in his benign manner he has answered practically the whole of them by saying, "Wait until I make my Budget statement." On many of these questions the Members of this Committee had a right to expect a much fuller answer from him. The first about which I desire more information is the amount of subsidy which is to go to local authorities for their rehousing schemes. We listened just a week ago to the Minister of Health, who gave us a very forthright Socialistic exposition of his attitude towards housing. I noticed that it was one of the Governmental speeches which was not received with so much acclamation by His Majesty's Opposition. In the speech made by the Minister of Health we did not get very much information about the financing of the new housing schemes, but we had been told on the same day by the Chancellor of the Exchequer that it was the intention of His Majesty's Government to assist local authorities by subsidies. If it is his intention to pay a subsidy rather than take the financially sound but rather more revolutionary method of floating an interest-free loan, that subsidy will have to be of a considerable character, and I


feel that it may meet with some opposition from Members of this Committee.
We were told by the Minister of Health that money can be obtained by local authorities from the Public Works Loans Trust at 3⅛ per cent. The average cost of the house which I envisage will be built by local authorities at current prices is something of the order of £1,000, it may be a little more or less, but not much. If we are to pay 3⅛ per cent. on that £1,000 it means that £31 5s. per annum has to go on to the rent in order to pay for the money which is being used for building the house. That will mean a very considerable cash subsidy per house if the Government are to compensate the tenants of the houses in anything like the same proportion as they would have been assisted if an interest-free loan had been raised. There is no moral reason, to a Socialist thinker, at least, why there should be any interest on a loan to which no risk is attached. I would ask the Chancellor to reconsider the possibility of further investigation, although I should think, from my knowledge of his background and experience, that he has investigated considerably the question of interest-free loans. I ask him to reconsider his decision because to ordinary people who will have to pay rent a burden of 10s. or 11s. a week is a very considerable one.
I should like the Chancellor to clear up a considerable doubt which exists in the minds of a large section of the public and of the party which now forms the Government on the question of gratuities. I believe it is true that 80 per cent. of His Majesty's Forces voted for the Labour Party in the last Election. I believe that one of the campaign slogans which won their vote was that they were told that the Labour Party, at its Blackpool Conference, had adopted a resolution which said it would pay equal gratuities for equal service, regardless of rank or sex. Hon. Members who sit behind the Government front bench must have been asked by constituents who are private soldiers, aircraftmen in the Royal Air Force or seamen in the Royal Navy, whether it is the intention of His Majesty's Government to implement the promise which was made by their Party, at any rate at their Conference if not during their Election campaign. I know what the answer is, because I wrote to the

Chancellor of the Exchequer and asked him for information, but it will be far better if the Government are anxious to maintain the good will which they have, and which this Budget has assisted in keeping, with His Majesty's Forces, for the Chancellor to make a statement in the House, setting forward the reasons why he is not to follow the policy that was agreed at the Labour Party Conference at Blackpool rather than that I should read—

The Deputy-Chairman (Mr. Hubert Beaumont): I have allowed the hon. and gallant Member considerable latitude, but I must point out to him that this is not an occasion for discussing the expenditure of money. This is a Committee of Ways and Means, and we are now dealing with the raising of money to meet expenditure.

Wing-Commander Millington: I beg the Committee's pardon, and I trust I may be fortunate enough to catch the eye of the Chair when we are discussing that expenditure.
I would like to go back to what I had intended to say originally when I sidetracked myself by catching sight of a note I had underlined rather heavily. There is very little purpose in having an interim Budget at this stage if it is to be a Budget of continuity, but there is considerable purpose if this is to be a Budget of change, and particularly if it is to be a Budget of revolutionary change. I can see ample and adequate reason why the Chancellor cannot get up at the moment and say "To-morrow—or even next April—we will receive income from this or that industry which we have socialised, or which we intend to socialise," but I think he owes it to the Socialist movement and the Socialist faith and philosophy which has been propagated for so many years, to make it clear at the earliest opportunity that the people of this country will go forward into prosperity on a national income which will belong to the people of this country in the not far distant future, instead of belonging to the present owners, namely, the shareholders of industry.
So I cannot, Mr. Beaumont, fully share in the congratulations which have been accorded. I must, in fairness, say that nobody welcomes more than I do the levelling out of the burden of taxation. Throughout the country there has been


a certain amount of qualified hostility towards the Government on such questions as demobilisation. The fact that they have approached the question of raising the national income on a fairer basis than any Government before them, and the fact that they have remitted from 2,000,000 people the onerous burden of having to pay Income Tax on small incomes, will go a long way to reinstate them in the good opinion of people who might feel that they are not getting all that they ought to get under the demobilisation plan.
I wish the Chancellor of the Exchequer and the Government the very best of good luck and good fortune in the arduous task that they have in front of them. They have to take a revolutionary line with the finances of this country in the not far distant future. It is a revolutionary line which is made more imperative by the cessation of Lend-Lease and the fact that we have to stand on our own economic feet in this country. The final comment perhaps is to say that even the slight changes and deviations from Coalition-mindedness which we have seen in this Statement have strengthened the power of the Commission which we have in the United States. It must show to the American people that the British people mean economic business.

8.7 p.m.

Mr. David Eccles: The Chancellor of the Exchequer in his speech yesterday stressed the need for continued savings and capital investment. I want to address my few remarks to this topic. I think we are all agreed that we shall not succeed in rehousing the people, re-equipping industry or paying for our imports unless, in the next few years, we devote to capital investment very much more money, labour and materials than we did before the war. The point was well put in an article in last week's "Economist" where it was said that without a broad stream of new capital investment "stagnation was certain and decadence was not impossible." I agree with that statement, as I say that unless we save and invest at a rate quite unprecedented in peacetime this country will shortly and definitely cease to be one of the Great Powers.
I make no apology to the Committee in asking their consideration for the question where the capital is to come from and by what means labour and material

are to be withheld from the production of consumption goods in order that our savings may be transformed into physical capital assets. I think the Chancellor of the Exchequer will agree that this is a basic problem of reconstruction which has not yet received the attention it deserves. I need not trouble the Committee with figures. It is sufficient to repeat the calculation of the "Economist" that we require, to meet first priorities only, to save at double the pre-war rate. That is to say that a man who saved 1s. in the £ of his income before the war must now save 2s. in the £ if he wants his country to remain a Great Power.
It is important to stress the well-known fact that one set of people do the saving and another set of people spend the savings. The general public, and only the general public, can provide the savings. If they choose to spend and not to save they will compete successfully for the resources that are wanted for the production of capital goods. Of course, the Government themselves could, if they were so minded, enter this competition without using the savings of the people. They could inflate, and with money created out of nothing they could pay for houses and other things, but such competition would break the price level and would result in misery and chaos. In a period of general scarcity such as we shall go through in the next two or three years, and in which there will be more vacant jobs than men and women looking for those jobs, it is only out of the genuine savings of the public that capital reconstruction can be financed without a quite unpredictable rise in costs and prices.
Whatever sum the public are going to save during the life of this Parliament—I shall come back to this point in a moment—the most disturbing feature of this Budget is that far too much of those savings will be spent by the Government on consumption expenditure and services. It cannot be too often stated that in a period of full employment there is a very real choice between house-building and re-equipping industry on the one hand and, on the other, expenditure on such items as defence, social services and subsidies to keep the cost-of-living down. I calculate that every 50 men kept in the Forces a month longer than necessary would inescapably deprive the community of the resources needed for one permanent


house. I expected the Chancellor to come down with the full authority of his office to explain this hard choice to the Committee and to show that there were these solid reasons for drastic cuts in the consumption expenditure of the Government, in order that we might have a sufficient volume of new capital created. Instead of that, the right hon. Gentleman presented us with the striking paradox of his exhortations to the ordinary citizen to save and to invest while he himself continues to spend at the dizzy rates of wartime. This is by far the most disturbing feature of the Budget. What we need as a nation is a steady, large volume of private saving, not absorbed in current consumption by Government expenditure, but matched to a programme of private and public capital investment.
I now turn to consider the prospects of getting a steady, large flow of private saving. Why do people save? One must answer that question before going on to the more practical point of how much money we can expect the public to save during the lifetime of this Parliament. I think the modern reasons that lead men to save are almost as complex as the reasons, in present circumstances, which determine the rise or fall in the birthrate. As the right hon. Member for the Scottish Universities (Sir J. Anderson) said this morning, the law of supply and demand is not sovereign here.
While it is true that the rate of interest has some effect on the volume of savings, it never has been, and is now much less than formerly, the sole stimulant and governor of the rate of savings. I was perplexed to hear the Chancellor give his speculator's tip to the public yesterday to buy the long-dated Government stocks because it appeared to contain the old-fashioned idea that it is a variation in the rates of interest that really calls forth savings. Of course the return to be expected from an investment is not a negligible feature, and in so far as the Chancellor is successful, as we hope he will be, in his cheaper money policy, he is deliberately weakening one of the motives for private savings and thereby throwing more weight on the other motives.
What are these other motives? I would divide the motives into two categories,

personal and patriotic. Men and women always have saved, and always will save, something against a rainy day. They put something in a stocking or a teapot or a bank, irrespective of the rate of interest. That is what I call personal savings. Any family that has no personal savings is always at the mercy of someone—at the mercy of their neighbour or of the State. Therefore, this kind of saving is to be commended because it buttresses the character and self-reliance of the individual. It is a method of foregoing present pleasure to secure future independence.

Mr. Gallacher: Will the hon. Gentleman tell us why, if this method of saving is to be commended, he and his party penalise those who make such savings by imposing a means test and depriving them of pensions?

Mr. Eccles: I am very much against the way in which small savings are counted in the means test. If I had anything to do with it, I would reverse that position. To come back to my argument, we do not know what effect upon the rate of personal savings a National Insurance scheme would have which guaranteed full subsistence to all men for all time. If it caused a sharp drop in personal thrift, the Chancellor, whether he is a Socialist or a Conservative, would have to find other means of inducing people to forgo present consumption and to provide a flow of savings for public and private enterprise. Be that as it may, taking all the known facts and prospects, it is impossible to anticipate that the rate of personal savings after the war will exceed the rate of total savings before the war. There are good reasons why it should be lower. This total we would all agree will be quite inadequate to the needs of the nation.
Therefore, we must turn to the other motive for saving, which I have called patriotic. Patriotic savings are of the kind which were stimulated in a remarkable way by the common objective of winning a great war. A man will put by additional savings if he considers it his urgent public duty to make a sacrifice of the present for the sake of the future. On my definition, money put into a bank and lent by the bank to the State or to industry, might be personal or patriotic; it depends on whether the


amount so saved is normal or abnormal. During the war, the Coalition Government made successful appeals to the public to save at an abnormal rate. No doubt a valuable habit was formed in those six years which is a legacy to the present Government. It will help them very much, I hope, to offset the natural desire of some people to cash their wartime savings and buy goods when the goods are there to buy.
Are the Government going about it in the right way to confirm and fortify this habit? That is the real test of financial statesmanship at the present time If this habit is weakened, if the flow of voluntary savings falls below what is required, the Government will be faced with a dreadful choice. They will either have to abandon all the hope of carrying out the reconstruction programme at a reasonable level of costs and prices, or they will have to use heavy compulsion to restrict spending and to allocate labour and material between the production of capital goods and the production of consumption goods. In my judgment, the British public would not stand for the second alternative Compulsion is ruled out of court. So the fact emerges that if reconstruction is not financed voluntarily it cannot be financed at all. In these matters, as is inevitable in a free country like ours, the Government are in the hands of the public and not the other way about. The Government might continue to win large majorities in the Lobbies of this House, but large majorities will not make the citizen and his wife save at an abnormal rate. They will only do that if they give their warm approval to the objects, and the means to carry out those objects, for which they are asked to save twice as much as they did in the old peace-time days. That is why I compared the motives for this extra savings with those which determine the birth-rate. It all depends on whether you think the future is going to be more worthwhile than the present.
That brings me to the vital issue. I want the flow of private savings to be adequate to the needs of the nation. I am confident that I put those needs in terms of millions of pounds a good deal higher than most hon. Members. A fortnight ago I appealed to the people whom I represent in this House to make the Chippenham Thanksgiving Week a

success. I told them that it would be wrong to deny to the Chancellor at the outset of his administration the essential weapon against inflation and the essential means of reconstruction. I am bound to warn the right hon. Gentleman that, as the months go by, the response to all these appeals will be a direct reflection of public confidence in the Government. I can think of nothing more likely to impair that confidence than the sense that taxes and the money derived from savings are being wasted. If the public do not see that Government expenditure, now that peace has come, is drastically reduced, they are bound to conclude that their money is being wasted. I go further and say that if the right hon. Gentleman and his colleagues do not keep their programme and their Parliamentary actions within the wide ambit of the objects and means of achieving those objects on which 90 per cent. of the people are agreed—if, instead of pursuing these common aims and respecting these agreed methods, they use their majority to steam-roller Bills against which there is wide feeling in the country, they must impair that confidence and disrupt the unity which everyone knows have been the backbone of the successful savings campaigns in the war.
The Chancellor must realise that every act of saving is an act of confidence in the future and that confidence depends, not on a mandate cast once every five years, but on the day-to-day actions of the Government. There are many of us on both sides of the Committee who care much more for the recovery and prosperity of our country, weakened by war and beset by so many international difficulties, than we do about the 100 per cent. fulfilment of any political theory. We know that if public money is to be spent in the amounts forecast in this Budget the recovery, if it takes place at all, will be very slow, and we also know that if political doctrines are pressed to the extreme the country will be divided into two camps. That means the frustration of many simple hopes and, among the first of them, all hope of financing the reconstruction programme—the bare minimum of the agreed reconstruction programme—on a voluntary basis. [An Hon. Member: "Why?"] Because the rate of voluntary savings will not keep up unless there is wide agreement in the


country about the objects for which saving is invited.
I end these remarks with an appeal to the Government not to make inevitable a deterioration in public confidence. They are the masters of this situation. We know the water through which they are guiding the ship is very rough, and we want to see the ship well and safely guided. I am quite sure that if they will, with scrupulous vigilance, cut down unnecessary expenditure and thereby release resources for capital investment, we may be able to re-equip our country efficiently and quickly enough to maintain our standard of life and the very high prestige which we enjoy in the world at large.

8.28 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I think some hon. Members have forgotten that this is an interim Budget. The Chancellor is doing little more this time than implement the undertakings given when the original Budget was introduced during the term of the last Government in the last Parliament. Just as this is an interim Budget, so the speech I am about to inflict on the Committee to-night is in a sense an interim speech. The Chancellor of the Exchequer himself will be winding up the Debate at the end of the discussion which is to take place to-morrow. On the whole, I think we have had a very useful and profitable discussion to-day. Quite a number of legitimate points have been made and, as one or two speakers have pointed out, the Chancellor himself has come in for quite a lot of praise. That is one of the difficulties of replying to the Debate, there has not been a great deal of criticism to answer. But to such as there has been, I will endeavour in the short time at my disposal to reply from the Government's point of view.
The right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) started off by saying that he was a friendly critic, and I think there is no doubt that he is. The criticisms that he had to offer were not grave, nor were they of much substance. He did, however, say that he was disturbed by the Chancellor's statement that the expenditure this year would approximate to the estimate which he himself arrived at when Chancellor, namely, £4,500,000,000. What he forgot to remind the Committee

is that as he made that estimate while the war against Japan had still to be finished off and won, it was only a guess. There is no doubt about it that if the war against Japan had continued the sum would probably have been greater. Therefore, the fact that the amount which the Chancellor of the Exchequer now thinks will be the final out-turn for the year does approximate to the sum which the ex-Chancellor laid down is, in a sense, purely fortuitous. What we have to realise is that the expenditure which it is anticipated will be incurred during this financial year is quite unavoidable. As the ex-Chancellor himself said, we have to meet a certain number of end-of-the-war commitments which cannot be avoided—payments for the loss of contracts, money due to men coming out of the Services, and various other items. In spite of the fact that the war with Japan has ended, therefore, it is untrue to imagine, because the amount we are asking the Committee for is the same as the ex-Chancellor asked for when the war against Japan was unfinished, that we are being extravagant. I have to tell the Committee that such is not the case. We have, since we have been in office, made every effort—and will continue to do so—to reduce expenditure to the smallest amount compatible with efficiency and the implementation of obligations into which the Government has entered.
The ex-Chancellor said that he thought the subsidy of £300,000,000 which the present Chancellor mentioned yesterday as necessary to peg the cost of living would probably be insufficient. I think he must have forgotten that the Chancellor himself indicated that £300,000,000 would probably not be enough, that at the present moment owing to the ending of Lend-Lease the subsidies were running at the rate of £250,000,000, were rising and would be likely to reach £300,000,000 and possibly go beyond that. I think the Chancellor carried the whole Committee with him when he indicated that although this was a very large sum it was not too much considering what it was going to do, namely to keep the cost of living stable and to prevent it rising to any very serious extent.
The right hon. Member for the Scottish Universities went on to deal with the present Chancellor's suggestions with regard to taxation and the changes in Income


Tax. He said that he did not think it was fair that post-war credits should come to an end, as is proposed, at the end of next March, because although a portion of the allowances to which these post-war credits referred was being restored, the earned income allowance was not. That is quite true. Although some of the allowances have been put back not only to the pre-1940–41 level, but to the pre-war level, the earned income allowance has not been restored to its old percentage. In spite of that fact, it is nevertheless true to say that the allowances that have been put back are larger than the allowances were when they were taken away and the post-war credits instituted.
I am one of those who believe that the institution of post-war credits was a mistake. By the time they come to an end they will cost the British taxpayer £800,000,000, and I am positive that if they had never been instituted people would never have missed them. People would have been quite willing to sacrifice these sums during the war in the same way as they bore other sacrifices. They were in the nature of a free gift to the people who at the time had not expected it. Even to-day there are countless people who believe they will never get the post-war credits anyway. Nevertheless, they are there, and the Government have indicated that they mean to pay them at the proper moment. One hon. Member asked how they would be paid when the time came, and whether they would be paid in cash. The answer is "No." The undertaking given at the time they were instituted was that they would be placed to the credit of the recipient in the Post Office or in some other trustee savings bank. When that time will come, of course, I cannot say, but that it will come can be taken as definite.
I would like now to refer to what the right hon. Member for the Scottish Universities said on the Chancellor's statement concerning the use of the Budget to iron out inequalities between one section of the population and another. The right hon. Gentleman said that tax incentives, when given, should give the maximum benefit to the community, and he indicated that hon. Members on this side took the view that one could tax the rich almost indefinitely and that by so doing one not only provided money which the nation needed but helped to redress social in-

equalities. In listening to the right hon. Gentleman, I could not help thinking that he was perhaps confusing the really great with the really rich, because he appeared to assume that the two were one, and that by taxing the man with money one would necessarily rob the community of something which otherwise would be valuable to it. I think we are all familiar with the fact—it is undoubtedly a fact—that many a truly great man has died in a garret.
My hon. Friend the Member for Chesterfield (Mr. Benson) asked a question which it is not easy to answer. He wanted to know whether P.A.Y.E. will make it impossible to use variations of Income Tax as an offset against trade cycles. The simple answer is that the old system did not do it and was, in fact, much less elastic than P.A.Y.E. in its application to the Schedule E taxpayer. I do not see why my hon. Friend should imagine that P.A.Y.E. will in some way prevent the policy outlined in the White Paper on Full Employment from being successfully operated.

Mr. Benson: The point I raised was this. If Income Tax variations are to be used as a weapon against trade cycles, they must be capable of instantaneous variation and application. It has been said that it takes atleast six months after the decision to alter the Income Tax to vary the codes for P.A.Y.E. That means that one could not use Income Tax as a weapon against a trade cycle for six months, which would mean that it would be almost valueless.

Mr. Glenvil Hall: The point I am trying to make is that if the previous method of reaching the taxpayer through the Income Tax had been employed the time lag would have been much worse, because Income Tax was levied on the previous year's income, and it would have taken a year or 18 months to use an Income Tax change as a weapon in this direction if the Government had been minded so to do. At this juncture I might inform the Committee that it would not take six months to get out the new tables that are essential when any change of tax takes place. It would take not more than tour months from the time when the change took place to carry out all the processes of getting the tables printed and distributed in order to carry the thing


right through from the decision of the House to the desk in the tax inspector's office.
The hon. Member for Harwich (Sir S. Holmes), who, I think, leads one section of a Liberal Party, ventured the opinion that had the previous Government remained in office they would have brought in the same Budget. There, of course, the hon. Gentleman enters into the realm of conjecture where I, being an ordinary plain man, cannot follow him, but although he may hold that belief, he will find very few on this side of the House who share it with him. The hon. Gentleman was on more realistic ground when he asked for a relaxation of the Entertainments Tax in respect of sports and games. I have to say to the hon. Member and to the Committee that the Chancellor is sympathetic towards his request. We are none of us enamoured of this particular tax. But it is very difficult to know where to draw the line. I have to tell the hon. Member and the Committee that the Chancellor will look at this matter with the utmost sympathy in the hope that at a not too distant date—when it may be, I cannot say—something may be done to help in this and other deserving directions.
The same point was raised by my hon. Friend the Member for Huddersfield (Mr. Mallalieu) who, if I may say so, made a very felicitous and attractive maiden speech. I took a pride in it because he happens to be a constituent of mine, and I have followed his candidature in the constituency he now represents. I sit for the seat which his father previously held, and I gave his brother, who held different views from himself, a very sound beating some years ago. Therefore, as I say, I took a very great interest in the first speech which my hon. Friend made, and I share the hope, expressed afterwards, that we shall have many contributions from him in the weeks to come, which will be valuable, constructive, and helpful to our Debates. He expressed disappointment that the Chancellor of the Exchequer had not done anything about Death Duties. The day is young yet, and there are other Budgets to follow. I, for one, have not the slightest doubt that some changes in the Death Duties, one way or the other, may be made by the Chancellor, possibly, when he opens his Budget in April.
The hon. Gentleman the Member for Scarborough and Whitby (Mr. Spearman), who always contributes to these Debates something which is worth hearing, referred us to the White Paper on the sources of war finance. I would tell him that there is no foundation for the suggestion he made that the Chancellor is taking a narrow view of expenditure. On the contrary, he has got this matter very much in mind, and has proposed to Departments that economies must be enforced. I think the hon. Gentleman can take it from me that the views and the fears he expressed have no foundation in fact. The Chancellor is well aware of the situation, and is as desirous as any of us that we should secure the utmost economy. It is, however, impossible to follow out the hon. Member's suggestion at the present juncture, and make an estimate of what the total national income is, for the very simple reason that, as he knows only too well, the situation is in a state of flux. But, as soon as conditions make it possible, the Chancellor will be only too willing to give the House all the information he can.
I am sorry to see the Leader of the Liberal Party is not in his place. He welcomed the Budget, but he queried whether praise from the right hon. Gentleman the ex-Chancellor of the Exchequer would not be an embarrassment to the Chancellor, rather than a help. It may be that praise, either from a Conservative or a Liberal, might, in certain circumstances, not be of much use to a Socialist Chancellor of the Exchequer. He had some very strong things to say about the Excess Profits Tax, with all of which every one of us would agree. As has been said by the Chancellor himself, it is an excellent tax for a short war, but a bad tax for normal times. There is general agreement everywhere that none of us likes this tax; all of us would like to see it go as soon as that is possible.
He made a suggestion—which I am sorry I cannot follow up—that there should be, in its place, a tax on excess dividends. I can only assure him that the Chancellor will look at the idea—perhaps he has already considered it—and will see just what there is in it. He also—I think I am correct in my recollection—stressed the importance of expenditure after six years of war on capital investment. He divided expendi-


ture into three categories—Government expenditure, expenditure on personal consumption, and expenditure on capital investment. I can only say to him that all these things are in the mind of the Chancellor and will be matters for consideration and discussion when a proper yearly Budget is opened rather than at a time like the present when the Chancellor can do little more than clear up what has been left over from the Budget of the last Parliament.
The hon. Member for Blackley (Mr. Diamond) made a very witty maiden speech. The chief burden of his remarks was that he wanted to see E.P.T. abolished and also would like to see the pre-1940–41 earned income allowances restored. I hope that I have already dealt with both those points in sufficient detail to satisfy him for the present. It is possible that the Chancellor himself may deal with the matter when he winds up the Debate to-morrow night. There is, of course, a good deal to be said for raising the earned income allowance to the previous level. I hope the Committee will realise that the Chancellor cannot do everything, particularly in an interim Budget of this kind, and that he has made a beginning which I hope will be taken by the Committee as an earnest of his desire to help all sections in this matter. We realise that taxation is exceedingly heavy both for the small man as well as for the man in business. There is everything to be said for lessening taxation at the earliest possible moment. It is essential, though, at the same time, to keep one's feet on the ground and for the Chancellor to realise, as he does, that there are enormous demands yet to be met. He has also and above all to keep in check the inflationary tendency which, as has been said, is always just round the corner.
The hon. Member for Dover (Mr. J. R. Thomas), in another excellent maiden speech, asked what benefit this Budget brings to the lower paid workers, and I think that one has only to ask the question to realise what the answer is. At least 2,000,000 of the lower paid workers are going to go out of the Income Tax-paying class altogether and no one can dispute the benefit of this to them.

Mr. J. R. Thomas: Is it not a fact that although 2,000,000 people are being ex-

cused the payment of Income Tax, the monetary value to them is no more than 1s. or 2s. per week?

Mr. Glenvil Hall: I think it all depends on the person. It may very well be that with some of them so far as these allowances are concerned, it would be no more than 1s.a week, but I believe I would be correct in saying that, for the great majority of them, it is something more than that. All of us are familiar with constituents who come to us and tell us that they have 4s., 5s., or 6s. Income Tax stopped out of their pay and who want to know if they cannot do something to avoid this charge. Under the present rate of allowances, they cannot; the money is due from them and they have to pay it. I think it would be untrue to say that it means no more than 1s. a week to most workers, but, even if it does, 1s. a week is worth having in the kind of home which my hon. Friend has in mind. I would also remind him that the help which this Budget gives to the lower-paid worker does not stop there. As the Chancellor said yesterday, he intends, whatever the cost, to peg the cost of living roughly at its present level and, that, in itself, must be of great assistance to the lower-paid worker. For instance, it means 4d. on every 4lb. loaf they buy. It is plain, therefore, that this Budget does much—and I am very glad that it does—for the lower-paid worker.
The hon. and gallant Member for Holderness (Lieut.-Commander Gurney Braithwaite), in his humorous and light-hearted speech, had a good deal to say about the dangers of inflation. I am sure we all realise these dangers, and we are united in our anxiety that they should be avoided. Neither the worker who takes home his pay packet at the end of the week nor the employer who has to find the wages wants to see prices running away with them. The end of that road it is impossible to see, and, if we can avoid it, I can assure the Committee that we are going to avoid it. The hon. and gallant Member also raised a point on the Capital Issues Committee and when the old procedure of dealing in capital issues was to be restarted. I think he must have overlooked the fact—he has probably forgotten it—that there is a White Paper available at the Vote Office which will give him the information he wants on the point he mentions.
The hon. Member for Bury (Mr. W. Fletcher) had a good deal to say about invisible exports, and, as the Committee knows, during the war, the hon. Member was one of our most valuable exports, though certainly not invisible. In China and other places he did most valuable underground work on behalf of the Government and the Allied cause. He began by saying that it was his maiden speech, and I would like to join in offering my congratulations upon it. He said that he probably would not say what he had intended to say, and that reminded me of an hon. Member, whom some of us knew on this side of the House, of whom it was said that he did not know what he was going to say before he got up, had not the faintest notion of what the was saying when he was speaking, and could not remember what he had said when he sat down. I do not think that would apply for a moment to the hon. Member for Bury. He spoke with the utmost assurance, what he said was full of common sense, and we all thoroughly enjoyed his speech.
He was very anxious to see Treasury control relaxed. I think he must be unique in saying that, because most speakers in this House ask for the exact opposite, but he felt that in some way the Treasury stultified all the forward-looking policies which committees—and he mentioned one or two, at which apparently hon. Members were allowed to smoke—formulated. I think he has forgotten that, although all that may have happened in days gone by, we have had a change of Government and we have a new Chancellor of the Exchequer at the Treasury. Although there is Treasury control, it is control with a difference, and I can assure him that any schemes for the betterment of the country or of its people which come to the Treasury and have anything in them, get the support of the Treasury.
The hon. and gallant Member for Chelmsford (Wing-Commander Millington), who is the one lone representative of his party in the House, said that what we really wanted in Budgets of this kind was a little more philosophy, and a little less accountancy. I must admit that I did not quite follow what he meant. I thought yesterday that the Chancellor's speech was a very nice balance between philo-

sophy and accountancy and, for my part, I could find no fault with it. The hon. and gallant Member also complained that the Chancellor did not touch on the subject of Death Duties and that he should, in this interim Budget, have done something about that. I can only say to him that we have only just begun as a Government. We have, with any luck, another four years, and that means at least four more Budgets. There will be one in about six months' time, and I will pass on to the Chancellor of the Exchequer—who possibly has not thought of this before—the suggestion that Death Duties should be looked at. It may well be, therefore, that the hon. and gallant Member next April, instead of coming to curse will remain to bless, because he may find that his suggestion has been accepted and is being put into operation.
I would like but I have no time, to deal with my hon. Friend the Member for Chippenham (Mr. Eccles), who always on these occasions makes contributions of value to our Debates. I think he, too, is under a misapprehension. I share with him, as I know the Chancellor of the Exchequer does, all that he had to say on the great need for continuing the Savings Campaigns. It is quite true that there is in the country—it was implicit in what he was saying—a certain amount of slacking off in this direction; people are not so anxious now to save as they were when the war was on. It may well be that both sides of the House will have to pay more attention to this than has been paid in the last five or six months. It is essential that the people should save. It is essential that money should be found to fill the gap which, unfortunately, will continue to exist for a little while longer between expenditure and revenue. That gap can be considerably helped if people will continue to save. Therefore I thought that the views he expressed had a great deal in them, and I can promise him I will pass them on to my right hon. Friend the Chancellor of the Exchequer, who, I am sure, shares with him the desire that we should continue to make the Savings Campaigns the success they were during the war in order that they should play their part in finding money for housing and the other schemes with which the Government has to deal in the months and years ahead.
I am sure the Committee will be interested to know that thanks to the officials of the Inland Revenue Department we shall save, this time, a good deal of work on coding in connection with the new Income Tax changes which will take effect next April. As I indicated earlier, the preparation, printing and distribution of Tax Tables will occupy some three or four months, and one of the difficulties—and it is enormous for employers of labour everywhere—is first to get the information for themselves and then convey to their workpeople what their new code number will be. This matter has caused a good deal of thought in the Treasury, and I am glad to be able to tell the Committee that we think the difficulty has been overcome. Ordinarily, the code numbers for people who do not change their remuneration will remain as they are now. All that will happen is that after April these will be given a new value. Where, now, the single person is entitled to a personal allowance of £80 with, say, an additional £1 for insurance, his code number at the moment is 12. That is the code number applicable to the graduations between £81 and £85. A married person who is in receipt of a married allowance of £140 has at the moment a code number of 24. After April next the code numbers of these people will be as they are now, but those numbers will be given the new value which will be placed upon them as a result of the changes in the personal allowance and the exemption limit which come into operation as the result of this Budget. I thought the Committee would like to know that, because it is likely that many Members will get letters complaining that their code numbers have not changed as the result of the changes in taxation, and asking why. The short answer is that all matters relevant to the changes will be taken into account in the new Table. The only thing that will be changed is the value of the code number, which will correspond, completely and accurately, to the tax changes which, as my right hon. Friend indicated yesterday, would come into operation as from 6th April, 1946.

Ordered:

"That the Chairman do report Progress, and ask leave to sit again."—[Mr. Mathers.]

Committee report Progress; to sit again To-morrow.

Orders of the Day — FINANCE (COLLECTORS OF TAXES)

Considered in Committee.

[Major MILNER in the Chair]

Motion made, and Question proposed,

"That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of moneys provided by Parliament of annual allowances by way of compensation to any such collectors of taxes, collectors of land tax or other persons as may be designated by the Treasury, being collectors or other persons whose appointments are determined by the Commissioners of Inland Revenue after the thirty-first day of March, nineteen hundred and forty-six, and who were employed in and about the collection of income tax or land tax in the division of the City of London immediately before the passing of the said Act.—(King's recommendation signified.)—[Mr. Dalton.]

Captain Crookshank: I take it that this refers to the Finance Bill and not to a separate Finance Bill.

Mr. Dalton: The same Bill.

Sir William Darling: These are not ordinary employers who are acting as tax collectors under the P.A.Y.E. system?

Mr. Dalton: No, Sir.

Sir Stanley Holmes: If we fail to pass this Resolution to-night appointing these collectors after 31st March, 1946, does it mean that no one in the City of London will have to pay Income Tax or Land Tax after that date? If we do not pass the Resolution what will happen; and if we pass a Resolution concerning the City of London why not a Resolution with regard to the City of Glasgow or some other city?

Mr. Dalton: The hon. Member may take it from me that if there should be any such slip as he suggests, we should have to pass retrospective legislation. As I do not wish to trouble the Committee with such a supererogatory task, I hope the Committee will accept the Resolution.

Question put, and agreed to.

Resolution to be reported To-morrow.

Orders of the Day — FINANCE (PAYMENT OF EXCESS PROFITS TAX REFUNDS)

Considered in Committee.

[Major MILNER in the Chair]

Resolved:

"That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise:

(a) the payment out of the Consolidated Fund of any sums required for making payments of, or on account of, sums payable under Section twenty-eight of the Finance Act, 1941 (which provides for the repayment after the war of certain excess profits tax);
(b) the borrowing of money under the National Loans Act, 1939, for the purposes of providing the sums so issued."—(King's Recommendation signified)—[Mr. Dalton.]

Resolution to be reported To-morrow.

INSHORE FISHING INDUSTRY [MONEY]

Considered in Committee. [Progress, 18th October.]

[Major MILNER in the Chair.]

Question again proposed,

"That for the purposes of any Act of the present Session to authorise the provision of financial assistance to inshore fishermen and persons desiring to engage in the inshore fishing industry it is expedient to authorise:

(1) the payment out of moneys provided by Parliament of any sums required by the Minister of Agriculture and Fisheries and the Secretary of State concerned with the fishing industry in Scotland for making loans and grants to such persons as aforesaid towards the acquisition, improvement or reconditioning of boats and equipment, subject to the following limitations, that is to say:
(a) that the amount of any grant so made in respect of the acquisition, improvement or reconditioning of any boat or equipment shall not exceed one-third of the price, or one-third of the cost of the improvement or reconditioning, as the case may be;
(b) that the aggregate amount of the grants and loans so made shall not exceed five hundred thousand pounds and eight hundred thousand pounds respectively; and
(c) that no grant or loan shall be so made after the expiration of a period not exceeding seven years beginning with the date of the passing of the said Act;
(2) the payment into the Exchequer of any sums received by the said Minister and the Secretary of State by way of interest on or repayment of the principal of any such loans."

9.14 p.m.

Mr. Maclay (Montrose): A point has arisen which requires a certain elucidation before this Financial Resolution can be agreed to. I would like to say at once that this is a Bill which all of us who have the interests of inshore fishermen at heart would like to see law as quickly as possible, but it is most important that certain clarifications should be made in the Financial Resolution. I would not like the Minister to feel that I am trying to hold up the passage of this Bill. I believe that the point I wish to raise is one which the Government may have overlooked in considering the Bill, and which, if not dealt with now, could not be put right later. The case I wish to make arises out of the consideration of paragraph 1 (a) of the Resolution. It is possible, under this Resolution, to make a maximum grant to any fishermen wanting to buy a new boat—

It being a Quarter past Nine o'clock, the Chairman left the Chair to make his Report to the House.

Committee report Progress; to sit again To-morrow.

EDUCATION (GRANT REGULATIONS)

9.17 p.m.

Mr. C. S. Taylor: I beg to move,
That the Education (Local Education Authorities) Grant Regulations, 1945 (S.R. &amp; O., 1945, No. 709), dated 13th June, 1945, made under Section 100 of the Education Act, 1944, a copy of which Regulations was presented on 15th June, in the last Session of Parliament, be annulled.
I feel that I have an apology to make to the House in taking up time on two successive evenings with Prayers. Some people might think that I spend most of my time on my knees. But I feel it my bounden duty to raise this matter to-night. We are asking that this Order should be annulled, in order to give us an opportunity of debating the question of education grants, which are particularly important to my constituency, and to certain other county boroughs in England.
The House will remember that under the Education Act, 1944, Parliament laid it down that the education service was to be developed extensively, and, moreover, there was to be a uniform system throughout the country, which must conform to a


minimum national standard. On more than one occasion in the past, Ministers of Education have indicated that the responsibility for this great service should be divided equally between the State and the local authorities, and that there should be partnership in this. I ask the House to remember the word "partnership". I I do submit this is hardly the case so far as my own constituency is concerned, and as far as certain other county boroughs are concerned. My own constituency has to bear nearly two-thirds of the total expenses involved whereas the State bears only one-third. The history of the reason for this situation goes back many years, to the time of the old grant formula for elementary education. After the Education Act of 1921, the formula, for arriving at the amount of grants took into account, among other things, an amount based on the number of children in average attendance at school, and from the sum of this amount and others, was deducted an amount equal to the product of a 7d. rate. My constituency, as I am sure that hon. Members will know, is a seaside resort, and the number of children in average attendance is relatively low. The product of a 1d. rate is relatively high and, therefore, the grant payable by the State is considerably less than 50 per cent. of the total cost involved.
To meet this situation the formula provided that where the grant fell below 50 per cent. of the total cost—this is before 1931—the State made up the amount to a minimum grant of 50 per cent. On this understanding and assurance the present education service was very largely built up. In 1931, various economy Measures were adopted, and the 50 per cent. minimum grant was washed out, with the result that a large additional burden fell on the shoulders of some local authorities, instead of on the shoulders of the State. This position continued until 1939 when, because of the war, the position was consolidated on the basis of the years 1937–8. Under the Education Act, 1944, the amount payable by the State for the whole of the education services with one or two exceptions for which grants are provided specifically, will be calculated on the percentage which is the result of merging the appropriate percentage for elementary education in 1938–9, and the 50 per cent. payable in respect of higher education.
I am sorry that this speech is so technical, but this is a technical subject, and

one on which, I must admit, I had great difficulty in marshalling the necessary facts in order to present the case to-night. I think that hon. Members who have had experience on local education committees will realise the complexity of this question of grants. We find that in certain areas there is inequality created by the discontinuance of this 50 per cent. minimum grant. This situation has not only persisted in the war years but it is now being consolidated under the new Act and in this Order. I do submit to the House that the arrangement is inequitable. As an example, I should like to cite my own constituency. The combined standard percentage for education grant purposes is just over 31 per cent. To-day, of course, has to be added the 5 per cent. provided by the Grant Regulations of the 1944 Education Act, making 36 per cent. in all. But I want to say this, that the additional 5 per cent. grant is fully absorbed and more by the increases in teachers' salaries provided by the new Burnham Scale. As opposed to this, according to the figures given in the Order, out of 79 county boroughs in England, 60 have a percentage of 45 or more, which, with the additional 5 per cent. brings them up to over 50 per cent. I am putting forward this special plea for the ten county boroughs which will receive grants of under 50 per cent. after they have received the additional 5 per cent.
Eastbourne Education Authority view the future with considerable concern because of the heavy capital expenditure which will be necessary, and the large proportion of the cost which will fall on the shoulders of the local ratepayers. I am assuming that no further grants can be anticipated, and certainly they cannot be anticipated under this Order. The black prospects which we have to face, are made considerably blacker because we have to meet, like other districts, the very heavy capital outlay necessary to give effect to the new educational services. The town of Eastbourne has been considerably hit by the war. It suffered more than most places, both from enemy action and economically. It is one of those places which was evacuated at Government request, with a consequent fall in population. The residents who could go, were asked to go and settle elsewhere, and we have had to bear our full quota of war-time troubles and bombing.


I believe that, in proportion to the size of the place, Eastbourne was one of the most heavily bombed towns in England. There were more visits by enemy aircraft there than anywhere else.
I am asking that the 50 per cent. minimum grant should be reinstated. Notwithstanding the present reduced child population in my constituency, it is estimated that our expenditure on education for 1945–6 falling to be borne by the rates will be 20 per cent. more than in the previous year. No provision has yet been made for improvements in the education service other than an increase in teachers' salaries. I hope that the Minister will show a little generosity. It may not be possible, by voting against this Order to achieve this result. I am not going to vote against the Order, but it may be possible for the right hon. Lady the Minister to be able to give us some hope for the future that, even if legislation is necessary, the minimum grant of 50 per cent. will come back. I hope that she will be able to give a reassuring answer both to my own constituency and to the others affected.

9.29 p.m.

Flight-Lieutenant Teeling: ; I beg to second the Motion.
If I went into the details about my own constituency, I would almost repeat what has been so ably said by my hon. Friend the Member for Eastbourne (Mr. C. S. Taylor). It seems to me that this is only part of a problem that will have to be faced in the near future, a problem of how far we are to put the burdens of social improvements on to the local authorities, and how far we are to let them be borne by the State as a whole. That is, obviously, a problem which nobody is very keen to face at the moment, because it is a frightfully difficult one. Therefore we have to deal with these things piecemeal. After reading the many White Papers of the last Government, and the promises and prospects of what are to be brought forward by the present Government, one begins to wonder how much the local authorities are to be expected to bear. Before the war, the local authorities spent something like £93,800,000 on education, and the estimated eventual post-war expenditure will be something of the order of

£203,000,000. Whilst on health they were spending £41,000,000 before the war, the post-war prospects, even now at the outset, are something like £92,000,000. It is quite true that the Government are offering something like £115,000,000 for education, and have increased their offer for health from £500,000 to £44,000,000, but the local authorities are left with a burden of something like £60,000,000, and how far they are going to bear it is a matter which is constantly being debated and discussed up and down the country.
I gather that, during 1944, the average increase in rates in about 250 provincial local authorities, was something like 9 per cent., and they are now saying that it may possibly go up to as much as 40 per cent. more than the 1939–40 figure, without eventually breaking the back of the wretched ratepayer. Is this really fair? Can it be borne? To what extent is somebody who, if you like, is a bit of a miser and wishes to live in a small house although he has a very large income, to be able to have the advantages and benefits of the local authority without paying his fair share, and vice versa, what is the position of a person who may be hard up living in a large house if he has to pay very heavy local rates, when he does not have to pay much in national taxation? Why are there different percentages? In some cases the Government pay 50 per cent., in others less. The decision is arbitrary and often without logical reason. As a result areas such as Eastbourne and my own constituency are definitely suffering. In my own area, the effective reductions on elementary education were from 50 per cent. to 36½ per cent. This was after the financial crisis in the early 1930's. It represented an increased charge of about 5d. in the £. Until the outbreak of the war, the elementary education grant was calculated by formula, but for the war years, the position was stabilised by giving a percentage grant equal to the proportion borne by the State in 1937–38 when the formula was used.
Then came the consolidation of the grants for elementary and higher education which was brought about, as the hon. Member for Eastbourne has said, by the Education Act of 1944. Hitherto that grant for higher education had been 50 per cent. When consolidation came along


it was based on the figures relating to 1938–39, and the effect of combining the 37 per cent. elementary education grant with the 50 per cent. higher education grant was a consolidated figure of 39·47 per cent. Then, in recognition of the heavier burden which will have to be borne under the new education service, we, like everybody else, received an additional 5 per cent., which brings the figure up to 44. I understand that the poorer authorities will receive further assistance, but that my constituency of Brighton will not qualify for this. That is why I support my hon. Friend the Member for Eastbourne.
I believe that this is something on which the Education Associations' Committee are working very hard to try to get a definite settlement made, not just for one or two areas, but for the whole country. They are asking for 50 per cent., but I do not think they will be content to stop at that. Brighton is waiting to see the result and wants to know what will be the final outcome of those discussions. Perhaps the right hon. Lady will be able to tell us something about them. The position is that, whatever happens, we are well below the 50 per cent. rate at the present time and beg that something should be done to make our position better.

9.36 p.m.

Mr. Corlett: While I sympathise very considerably with many of the statements made by the hon. Member for Eastbourne (Mr. C. S. Taylor) and the hon. and gallant Member for Brighton (Flight-Lieut. Teeling), I would have felt more sympathy with them if they had represented some of the constituencies which are, at present, levying education rates of 7s. 6d. in the £. I find it hard indeed to have any sympathy for the constituencies represented by the two hon. Members. I hope the right hon. Lady, the Minister of Education, will set her face like flint against reintroducing the guaranteed 50 per cent. When the economic blitz hit this country in 1931, this was one of the casualties, and, personally, I never regretted it. I hope it will not be reintroduced.

Let us look at the history of the 50 per cent. grant. Before 1870, it was generally agreed that the parents, the ratepayers and the State, should pay one-third each for elementary education. I

believe that was the basis of the Forster Act in 1870. The Forster Act was based on that principle. Mr. Gladstone was compelled, before the Bill went through, to give way on the one-third and instead to raise the State grant to one-half. That is the origin of the fifty-fifty basis. But it was a maximum, and not a guaranteed minimum. I have always been puzzled why Mr. Fisher, in 1918, reversed the process. I cannot understand why he introduced the guaranteed 50 per cent. minimum in 1918, which was exactly the reverse of what had obtained before. He did it in the teeth of all the expert opinion. He did it at the behest of a scratch deputation of London Members of Parliament who were concerned only with the increase in their rates. It did not appear in the Kemp Report, and that report was the basis of Mr. Fisher's Education Act. If we were at any time to reintroduce the 50 per cent. guaranteed minimum, then we could say good-bye to any attempt to equalise the distribution of burdens among local authorities.
I beg the Minister to give very sympathetic consideration to the position of the local education authorities, as I am sure she will do. I was very alarmed when. I looked at the figures recently. I think that the two hon. Members who have spoken rather understand the position. Actually, the elementary education rate in this country is 25 per cent. higher than it was in 1938–39. In 1938 and 1939 the education rate was 3s. 11d. That is the minimum. It is now 5s., which is an increase of 1s. 1d., an increase of 25 per cent. This is very serious. Further than that, between 1938 and 1939 four education authorities were levying an education rate of 7s. 6d. in the £. But, last year, there were eight. There were eight this year, and, presumably, there will be eight, or more, next year, levying rates of 7s. 6d. in the £. Another disquieting feature is the increase in the number of authorities who are now levying education rates from 4s. 6d. to 7s. Those, in my opinion, are the serious factors, but still I do not think we have reached a really serious position. This increase has taken place, although we have not yet introduced a single reform under the Act. That is the significant point. We have not built any new schools; we have not modernised existing schools; we have not the smaller classes, and we have not the


equipment. We have not all these things, and yet, before we start, the education rate is already up 25 per cent.
I do not know, but I think the right hon. Lady will agree with me, that the educational standard in the schools, now, is actually below what it was in 1938. Staffing is inadequate because of the number of men in the Forces, so the standard is actually lower to-day than it was in 1938, and yet, I repeat, the rate is up 25 per cent. The position is still more serious than that. I think the hon. and gallant Member for Brighton (Flight.-Lieutenant Teeling) mentioned the fact that, already, the local education authorities have received the extra 5 per cent. to which they are entitled under the new Act. That was to have been spread over four years; they were to receive, first 2 per cent., and then three lots of 1 per cent. But they have received all that already, and, therefore, have no further assistance to expect from the State.
Lastly, the necessitous areas come into the picture. No distressed area grant in this country has yet solved the problem of necessitous areas, and the necessitous area grant in this Act, will fail absolutely, as I have shown, owing to the number of authorities who are now levying these high rates. I would suggest to the Minister two things which she might do. I suggest that she should consider very carefully the question of giving authorities in England 100 per cent. grants for the cost of school meals and the cost of the medical services. I believe that would cost £3,000,000. The authorities assure me that, if that were done, they could avoid the necessity of raising the rate during the next two crucial years, before any of the reforms can be operated. The position of the authorities is very serious. They are now considering working out development plans under the Act. These plans will necessitate considerably higher expenditure. There will be much opposition on the ground that the rates are already up 25 per cent. There will be greater opposition if the rates rise in the next two years with nothing to show for it. I hope the Minister will consider the possibility of helping those who, believing in the Act, are determined to introduce these reforms and who will have to meet these difficulties. I ask her to encourage them and help them to ensure that there will be no need to raise the rate in the

next five years. That is fundamental. We must give them every help so that they need not raise the rate in the next two years until we raise the school leaving-age.
I suggest, therefore, an immediate 100 per cent. grant for meals and the 100 per cent. grant for medical services. These two things should never have been carried on the education account. School-meals are part of our social security arrangements and should be carried on under social security provisions and the medical services should come under the Ministry of Health and should not be carried on the education account at all. If we could get these two promises from the Minister, it would help those who represent the constituencies to which reference has been made and with which I say I have no sympathy. I am not trying to solve their problem. They are among the aristocrats, and I am not interested in their problem, but I am interested in the other problem. Consideration should be given to the immediate setting up of a committee to investigate the whole question of the relationship between local and central administration. The thing is getting out of hand. We do not know the basis on which these small national services which are borne both locally and nationally are fixed. As far as we are concerned, in the matter of education, it is 30 years since the Kemp Committee inquiry. If the right hon. Lady cares to set up such a committee and, if it reported before the raising of the school leaving age, and gave a formula, then not only could we secure greater assistance from the Exchequer, but, we could secure what is more important, an equitable distribution of grants. In that case, I believe the authorities—those who are enthusiastic—would be prepared to put up a fight in the next two years for the reforms necessary under the Act. I am sorry to have been so importunate in this, my first speech in this House.

9.47 p.m.

Wing-Commander Roland Robinson: I am sure the House would wish me to congratulate the hon. Member for York (Mr. Corlett) on his maiden speech and to express the hope that we shall hear him in this House very often and that he will be able to make a good contribution towards the cause of


education which he, so obviously, has at heart. I do not intend to-night to go into the general field of education but to confine myself to supporting my hon. Friend the Member for Eastbourne (Mr. C. S. Taylor) and my hon. and gallant Friend the Member for Brighton (Flight-Lieutenant Teeling) in their Prayer. I do so for two reasons: The first is that I have the honour to represent one of the 10 boroughs concerned in this anomaly and the second is because I believe that the plea of my hon. Friend the Member for Eastbourne is, essentially, a plea for fair play. I need hardly tell the House that we are all definitely in favour of the progressive development of the standards of education and will give to the right hon. Lady the fullest possible support in carrying out the Education Act, 1944. The two boroughs which I have the honour to represent are particularly proud of their own schools and of the excellence of the quality of the education which they give to their children. We are concerned to-night, however, only with the cost of education and with educational grants, and the plea of this Prayer is for a return to the system, which, up to 1931, was considered a fair division of the cost—that was, fifty-fifty between the State and the local authorities.
I know there are many hon. Members on the other side of the House who feel that it is unfair that the poorer local authorities should have to bear very much of the charges for education, and, naturally, we have a great deal of sympathy with them, but, surely, they should understand that the whole point of making education a national charge is to even it out over all the authorities throughout the country, and not merely to relieve some at the expense of a few other local authorities. We want to try to keep a fair balance, so that no local authority need fear that it will be impoverished in providing educational facilities for its own children. When the standards were changed in 1931, we felt that they were weighted rather unfairly against us. The year 1931 was a time of economy, and cuts were made all round, but there were some things which the Government of the day thought could not be cut, and they had to select somebody to "carry the baby" for them, so

that these services could be continued. In their time of need, they asked these local authorities to pay still more for education, and that was admitted by the local authorities without serious complaint.
As things are now, there are 10 boroughs against which this arrangement operates rather unfairly, and it may interest hon. Members to know that these boroughs are Blackpool, Bournemouth, Brighton, Croydon, Eastbourne, Exeter, Hastings, Oxford, Southend and Southport. We ask that we should revert to the old system, so that those 10 boroughs should not be penalised unfairly. Especially is this of importance now, when, under the new Education Act, the burden of the cost of education is much greater than it has been before. We want to maintain the new national standard, and to help all we can. I do not think it would be quite fair for hon. Members to say that the people who live in the 10 boroughs can well afford to pay for it. We all listened to the Chancellor yesterday, and some hon. Members cheered very loudly when he told his own supporters that he had already taken away practically all the money we had.

Mr. Evelyn Walkden: You have still got the Tower, anyway.

Wing-Commander Robinson: Yes, and our Tower played a very useful part in the war. It has been said that we are low-rated boroughs. Probably the right hon. Lady the Minister has not, in her Parliamentary career, represented a low-rated borough, but, if she had, she would know that, low rates often mean high assessments. [Interruption.] Hon. Members should ask the people who pay. I have had thousands of complaints in my own constituency from people who say that, if the rates are low, the assessments are high, and that they are paying just as much as people in the higher-rated boroughs. I ask the hon. Lady to help us. To the people in these boroughs, it is a source of great discouragement that the full burden of cost of the new education should be weighted unfairly against them. It is so easy to say, in these days of big majorities, "Let us charge these people; there are only 10 of them." But I do not think the hon. Lady would want to do that. I ask her to hear our Prayer with an open mind, and accord us redress with an open hand.

9.54 P.m.

Mr. Kenneth Lindsay: I came here with an open mind to listen to the arguments of the hon. Member for Eastbourne (Air. C. S. Taylor). I am familiar with the case of that and similar constituencies on this question, but I only decided to try to catch your eye, Mr. Speaker, when I heard the speech of the hon. Member for York (Mr. Corlett). I have seldom listened in this House to a speech with greater information, spoken without a note, and yet absolutely on the mark. Nobody has put it more eloquently than the Parliamentary Secretary to the Ministry of Education—whose absence on this occasion and the cause of it we all deplore. I well remember during the Second Reading Debate on the Education Bill, sitting behind on the second Bench there, when the hon. Gentleman made a most eloquent speech on the whole question of these grants. He put the case, as I think the late Minister of Education might well have done five years ago. I am not saying anything new now, because I pleaded with him then to do it. But instead of appointing all these committees on public schools and so on, the one committee which was wanted when the right hon. Gentleman took office was a committee on the financial relations between central and local government. I said it five years ago, and I say it again to-night—the Education Act will not work. The right hon. Lady can do her best, but she will be frustrated by this impossible system at the present moment. It is not a question of Eastbourne and Brighton and Blackpool; it is a question of whether the local authorities can possibly bear the burden that is going to be put on them.
Therefore, I want to second the suggestion put forward with great knowledge—going back to Fisher and Forster—by the hon. Member for York. I want to ask the right hon. Lady to appoint forthwith a committee with power to act quite speedily, on the financial relations between central and local government in education. Meals and medical services have nothing to do with local authorities. We want to give the greatest possible freedom to local education authorities, but meals are the same in most places. How often did we beseech the local education authorities to go ahead with meals. We could not do

more; we had no compulsion. And then hon. Members would say, when I was sitting on the other side of the House, "Why do you not get on with meals in Sunderland and Newcastle?" All we could do was to beseech the authorities to get on, for we had no powers. The principle of a 100 per cent. grant for canteens has been established. Well, we want 100 per cent. for meals and 100per cent. for medical services, and if the right hon. Lady could do this, it would be a great advantage to the implementation of the educational parts of the Act. I see no reason why she could not do it. A committee could be set up with an impartial chairman and one or two specialists on this subject, and it would really help in having the Education Act of 1944 put into the speediest possible operation, in accordance with what is the universal desire of the House.

9.58 p.m.

The Minister of Education (Miss Ellen Wilkinson): The hon. Member who moved this Prayer said that he was always at prayer, and I seem to be cast for the rôleof the eternal answer to prayer. The object of this Prayer, of course, is to demand the restoration of the 50 per cent. minimum grant which was provided for, as the hon. Member for York (Mr. Corlett) said, in the Education Act of 1918 and was withdrawn in the economy period of 1931. Having taken out figures and seen what the cost would be, I find that the cost to the Exchequer would not be far from £1,000,000, and I am afraid—I have to say it—that the areas which would benefit would include not only the 10 county boroughs mentioned by the hon. and gallant Member for South Blackpool (Wing-Commander Robinson) but another six county councils which, altogether, would mean the richest areas in the country. I feel that if there were any hope of getting an extra £1,000,000 from my right hon. Friend the Chancellor I could find a better use for it than by making a present of it to what are acknowledged to be the 16 lowest rated areas in the country. This proposal to introduce a minimum grant was made during the Committee stage of the Bill in 1944, but it was not pressed. I want the House to understand what the effect would be. It would impede the operation of a formula which is designed for the specific purpose of varying the grant in order to


relieve the poorest areas. To ask us now to alter that formula to relieve the richest areas is really asking something which we could not possibly grant.
I appreciate to the full the argument put forward by the hon. Member for Eastbourne (Mr. C. S. Taylor), and the hon. and gallant Member for Brighton (Flight-Lieutenant Teeling), that the South coast suffered terribly during the war. I have reason to know how it suffered, because I was there when the area was being bombed, in the course of my duties as Parliamentary Secretary to the Ministry of Home Security. I can only pay my tribute to the people who stayed in the towns there, who carried on their ordinary work and who, I somehow feel, never got quite the public acknowledgment they deserved for the way in which they stood up to the enemy action, which was often worse than ordinary bombing, because it was deliberate and came when the ordinary processes of life—shopping and so on—were being carried on. But those problems cannot be met by any re-arrangement of the education grant. The problems of the bombed towns of the South coast, with all the losses they suffered in tourist trade and such like, have to be met by special Exchequer subventions which are designed to meet these special difficulties. I do not know whether the hon. Member has a grievance about the subventions he is getting, but if he has, then the quarter to which his complaint should be addressed should be, "11, Downing Street," and not "14, Belgrave Square."
I have looked at the rating situation and it is interesting to note—and I say it to comfort the hon. Member for Eastbourne and the hon. and gallant Member for Brighton—what it would mean to give this 50 per cent. minimum grant that is being asked for. I really cannot give any comfort to Blackpool, because anyone who has tried to find a bed in Blackpool knows that they have neither lost trade nor rateable value. I felt an authentic thrill when I heard the hon. and gallant Member for Blackpool making exactly the same sort of speech that I used to make on behalf of Jarrow but, as I say, I cannot give him any comfort. The equivalent rate for Eastbourne would mean that we were making a present of a rate equal to 7s. 6d. in the £. That is a pretty handsome sub-

vention to ask. For Blackpool—comfortable, over-prosperous Blackpool—it would mean a present of 5s. 2d. in the £; and for Bournemouth, it would mean 6s. 6d. in the £. Therefore, I feel that, while my heart is always open to hard-luck stories, it is difficult to weep tears over their present difficulties.

Wing-Commander Robinson: From the point of view of Blackpool, we are not pleading poverty at all. We are pleading only for fair play. I hope that the right hon. Lady did not think that I was putting forward this plea on the grounds of poverty because I am not. Perhaps the hon. Lady has forgotten that Bournsmouth is not represented at the moment, and, until the former First Lord of the Admiralty returns to this House, it has to rely on its friends from the other seaside resorts.

Miss Wilkinson: A very famous character in history once said "What is truth?" I would say "What is fair play?" I do not think that a mathematical equality in rating as between Blackpool and the Rhondda, could be considered fair play. I would say that all the areas in the country, the richest as well as the poorest, will benefit from the introduction of the interim Exchequer grant which will, I understand—I am not quite sure whether I am giving away news before the correct moment—be the subject of legislation very shortly. I am further given to understand—though I do not like to be definite—that this grant is intended to operate as from 1st April, 1945, and that its distribution will be based upon the latest available data. While I can only repeat that the relief of special conditions due to the war is not part of the function of the Education grant, I do want to say that we appreciate to the full the very great difficulties which are going to face all local authorities as we increase the social services, and as we increase the complexity of the task placed upon local authorities. No one is more aware than those of us who have to deal directly with local authorities how complicated relations have become between local authorities and the State. I would like to congratulate the hon. Member for York on a maiden speech in which, he did not ask our indulgence before he started, but put before us his arguments like a veteran speaker and casually remarked at


the end that it was a maiden speech. He and other hon. Members have pointed out these difficulties, and we appreciate them. I can only say as Minister of Education that it cannot be my job, as a single Minister, to deal with a problem which, in fact, concerns all the Departments that have to deal directly with local government. But I can say that the whole Government, the Cabinet, are aware of the very grave difficulties that are involved. I did indeed receive a deputation from the Association of Education Authorities which dealt with the special problems of the meals and the health services. I promised them, and I repeat the promise here, that I, with my advisers, will go very carefully into these difficulties.
I am not sure that appointing a committee is the best way of dealing with this matter. I am not quite sure whether the best way for a Minister to deal with such problems is to get a body of outsiders to look at them. I tend to think that this is a method which Ministers have evolved for shrugging awkward questions off their own shoulders. In my Department we have experts on these matters, and what they do not know of these questions is not likely to be known by outsiders. This is an extremely difficult technical problem. Therefore, while it is quite impossible, as I suppose the hon. Members realise, for the Government to accede to this prayer as it is put before them, I can only say that I will give the fullest attention to these questions of the school meals and the health services in particular. The question of the relationship between Government Departments and local authorities must, I am afraid, be a question for the whole Government and not for one Department.

Mr. Evelyn Walkden: Is there not a mistake in connection with the point in my right hon. Friend's speech earlier where she quotes figures of the cost of rate subvention in Blackpool and other places in shillings? Should at not be pence? Might not an adjustment be made so that it would appear as coppers, not shillings. Or can it be that we are proposing to build universities in Blackpool.

Miss Wilkinson: I am sorry. I saw that point almost at once and I should have corrected it. It is put down in

a long and complicated table as though it were shillings and pence. I am sorry. I made a mistake, and my hon. Friend the Member for Doncaster (Mr. E. Walkden) is right.

Wing-Commander Robinson: That makes our case so much more reasonable.

Miss Wilkinson: In practice, if one makes these coppers into pounds, the total amount would look most formidable.

Mr. Lindsay: I did not wish to interrupt the speech of the right hon. Lady, when she was speaking about the 5 per cent. but I gather it was not a new concession.

Miss Wilkinson: That is so.

Mr. C. S. Taylor: In view of the assurance given by the right hon. Lady that she will help us to champion the case of the distressed coastal resorts within the portals of No. 11 Downing Street, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

DEFENCE REGULATION 18B (EX-DETAINEES)

Motion made, and Question proposed, "That this House do now adjourn"—[Mr. Mathers.]

10.15 P.m.

Sir John Mellor: On 11th October I asked the Home Secretary;
If he will establish special procedure which will enable persons formerly detained under Regulation 18b to appear in the High Court with a view to clearing their reputations after public examination of the evidence which occasioned their detention.
The Home Secretary replied:
No, Sir. As has been frequently pointed out, these persons were not detained for contraventions of the law, and I do not think the examination of their cases by a court of law could produce any conclusion helpful either to the public, or to the individual detained under the Regulation."—[OFFICIAL REPORT, 11th October, 1945; col. 381, Vol. 414.]
I do not propose to criticise the Regulation, because I, in common with almost all hon. Members in the last Parliament, acquiesced in it, and must share the responsibility for its being enforced. Neither do I propose to criticise the administration of the Regulation. Indeed, I could have access to no knowledge


which would enable me to do so even if I should so desire. I should also like to make it clear that I am not raising this matter with any reference to a particular case, and, even if I had one in mind, I should be in no position to judge it on its merits, because everything has been wrapt in secrecy.
No one is likely to accuse me of bias in favour of people who may have liked the Germans too much in the past, because I have associated myself with the views of Lord Vansittart about Germany. I have publicly so associated myself and am a member of the council of an organisation over which he presides. The whole of the administration of this Regulation has been wrapt in secrecy. The only obligation laid upon the Home Secretary by the Regulation to disclose anything at all, was in Article 6, which required him to lay monthly before Parliament a return of the total number of persons detained under the Regulation, and of the number of cases in which he had declined to accept the advice of the Advisory Committee. That is all Parliament ever knew. I do not comment adversely upon that. It was accepted by Parliament as an unpleasant, disagreeable, inevitable necessity in time of war.
I feel that that secrecy has lasted long enough. There are British persons who had a distinguished record in the previous war and who, until they were detained under this Regulation, never had their patriotism impugned. That does riot necessarily mean that their detention was wrong. It can be argued that legally they are quite innocent. As the Home Secretary put it in reply to my Question, they were not detained for contraventions of the law. That is all very well in theory, but in practice they have suffered ostracism socially and many of them have been gravely prejudiced, if not ruined, in their businesses. They were detained under the quite arbitrary authority of the Home Secretary. He, I am sure, acted with perfect good faith, but after all, he may have been mistaken. It is a terrible thing that it is possible that a man, completely innocent in every sense of the word, a man of the fullest degree of patriotism, who through some error has been detained, will now have to carry that taint to his grave without any possibility of clearing his character. These people, it is true, have never been con-

victed, but I know that the general public is not inclined to give them the benefit of the doubt.
Therefore, the question arises how this rather horrible position can be set right. In reply to a supplementary question which I asked, the Home Secretary said:
This matter was dealt with in a judgment by Lord Findlay after the last war where he pointed out—and these are his words—
'It seems obvious that no tribunal for investigating the question whether circumstances of suspicion exist warranting some restraint, can be imagined less appropriate than a court of law.' "—[OFFICIAL. REPORT, 11th October, 1945; Vol. 414, c. 381.]
That passage is not quite in point with what I am saying. It was not after the last war, but during that war, in 1917, when Lord Findlay made those remarks in his judgment in the case of the King v. Halliday. The issue then was whether the order made for the detention of an individual was valid. I recognise the difficulty of attempting to adapt normal procedure to cases of this kind. Therefore, I would wish to recede from my original suggestion that these people should be allowed to go to the High Court. I think now that a more practical suggestion would be that any of these people who desired, who wished to clear their characters, should have the right to demand a public inquiry into their conduct. At that inquiry the Home Office would be required to lay all the evidence and the documents and produce all possible witnesses who could be cross-examined by counsel representing the person who had been detained.
I feel that that really is the least that can be done, and that as a result of such an inquiry a report could be made upon their conduct. The whole proceedings would be held in public, so that the general public would be able to judge in each individual case whether the person concerned had disgraced himself or not.
I would conclude with this suggestion, that the Home Secretary should consult the Lord Chief Justice as to the best form of inquiry. I suggest the Lord Chief Justice because, in the mind of the ordinary Englishman, he is the embodiment of British justice. It may well be that many of those detained are lucky to be alive: it may be that they are guilty of treason and should have been shot, but it may also well be that many of them


were completely innocent and, if a procedure such as I am asking for could establish complete innocence in one case, then it would have been abundantly justified.

10.26 p.m.

Mr. Maude: I feel some embarrassment at taking up just two minutes of the time of the House to-night, because I saw the Lord President of the Council here a moment ago, and I think he knows, as at least one other hon. Member opposite knows, that I know something, which is also known to the Lord President of the Council, of the history of certain matters dealt with under this Regulation. It is, of course, impossible to speak about details; the veil of secrecy is—to my mind, perfectly properly—drawn over the vast amount of matter which had to be sifted and considered But I am anxious that His Majesty's Government should be in no way embarrassed by the action of the hon. Member for Sutton Coldfield (Sir J. Mellor) who is obviously acting from the highest of motives, anxious as he clearly is that a person should not go through the rest of his life with a taint upon him, if it should be removed. I beg the House to believe that I, in my turn, in all sincerity, think his suggestions wholly impractical. It would be quite wrong to suppose that any good purpose could be served, in any shape or form, by attempting to have any kind of public inquiry into these painful matters before the High Court, or any other tribunal.

10.28 p.m.

The Under-Secretary of State for the Home Department (Mr. Oliver): The hon. Gentleman at the outset of his observations made it clear that he did not wish to criticise the Regulation, because he, along with many others in the House, was a Member at the time the Regulation was passed and many opportunities were available to criticise it or have it annulled, if Parliament had so wished. He also stated that he had no desire to criticise the administration of the Regulation. Therefore the only question which seems to remain is whether the Home Secretary, in discharging the obligations which Parliament had laid upon him, did so fairly and discreetly. That seems to be the only point remaining for discussion because even if the Home Secretary discharged his obligations reasonably, he

may have been wrong in one or two instances. Some other Home Secretary sitting in his seat at another time might have come to some other conclusions. It is true, even in a court of law where facts are ascertainable by evidence, that judges come to different conclusions.

Sir J. Mellor: Surely the Minister will agree that it makes a great deal of difference if those facts have been threshed out in public with witnesses cross-examined and the whole case dealt with publicly instead of secretly by the Home Secretary.

Mr. Oliver: Of course, if the facts could be sifted in the manner in which facts can be sifted in a court of law, then of course there is much to be said for the hon. Gentleman's suggestion. But it is not facts alone, it is the inferences which the Home Secretary draws from those facts which are material, and who could be in a better position to judge on these facts than the Home Secretary himself?
I was very glad to hear what the hon. and learned Gentleman for Exeter (Mr. Maude) had to say on this matter. He has an abundance of information which probably no other person in the House possesses, and he made it perfectly clear that it would be very difficult and probably highly improper, to open these cases at this particular time. The Regulations state that the Home Secretary or the Secretary of State "must have reasonable cause to believe." That is the condition imposed on the Home Secretary. If the Home Secretary did exercise his functions reasonably, it would be impossible in 1945 or in 1946 to say what the circumstances were, what facts were present, and what the inferences were at that particular time, which caused the then Home Secretary to act as he did.

Sir J. Mellor: Can the Minister say whether the records of the facts and all the documents that were before the Home Secretary of the time, have been preserved? Are they not still available?

Mr. Oliver: They may well be; I do not know whether they are or not. The whole point is that the Home Secretary would have certain information at that time on which he acted in a certain manner. He had to exercise his judgment on those matters at that time, and I think, having


regard to events in this country, the judgment which the Home Secretary exercised was a very reasonable one. The hon. Gentleman asked that there should be a public inquiry and that all the documents should be laid, all the evidence given in public, all the facts laid before a public tribunal, and witnesses produced and cross-examined in open court. I do not know whether such a thing is practicable.
It would require those who were the Secretaries when the Orders were made to come to court and suggest what were the reasons upon which they acted. That, to me, seems to be a matter which is outside the bounds of reason.

Sir J. Mellor: I was asking that the evidence on which they acted should be brought to the public inquiry, not the Home Secretaries.

Mr. Oliver: The position is, however, that the obligation is laid upon the Home Secretary and he must have "reasonable cause to believe." Only the person who was exercising that power at the time, could honestly give any validity and expression to those particular words. It is not something which is documented; it is the reasonable cause for belief in which he acts at the time and cannot put that into a pigeon-hole for future reference. I think the hon. Gentleman (Sir J. Mellor) is trying to open up something which, if I may respectfully suggest, ought to be permitted to rest.
It is impossible, in my view, to prove what a man would or would not have done in hypothetical circumstances. Exhypothesi, these people's loyalty was never put to the test because the circumstances never arose. By reason of the action taken by successive Home Secretaries, the circumstances did not arise—and the thing we have to bear in mind was whether the people who were detained, were people likely to do mischief and not whether they had committed any crime. Political views have never been an offence in this country, and they were not an offence even during the war. Under the Regulations, however, the Home Secretary had to decide whether the people against whom

he made an Order, were people likely to do mischief, and only he, with his knowledge, could come to that conclusion.

Sir J. Mellor: Surely the Home Secretary acted on certain ascertained facts. He did not just guess at it. I am only asking that those ascertained facts should be the basis of a public inquiry.

Mr. Oliver: I appreciate the point the hon. Gentleman has to establish. There are many facts, no doubt, upon which the Home Secretary acted, and many inferences which he must have drawn from those facts, but it is not a question of the facts alone; it is the inference which he draws from those facts which is material. Therefore, in my respectful submission, the whole suggestion put forward by the hon. Gentleman to-night seems impracticable. An inconclusive inquiry of that sort would moreover be detrimental to the people most worthy of consideration—those in whose cases the Home Secretary thought the risk of disloyalty was least likely. Detention Orders were made against 1,857 persons, 1,816 were detained during the first three years of the war, and of these 1,301, including all but 134 of the British Union cases, had been released by the end of August, 1942. Thus, nearly three-quarters of the detainees have been free more than three years. These people have had an opportunity of settling down to normal life, and it may be that their neighbours and employers do not even know they were detained. If some procedure of inquiry were established, every ex-detainee would have to submit his case to it, or leave it to be assumed that there was something in his record which would not bear investigation. So the hon. Member can appreciate that he would thus be driving people who would wish their past to be buried, to bring it out again; and if they failed to do so, the most sinister construction could be placed on their acquiescence. That would be a tragic circumstance, and one which I hope this House will not permit.

Question put, and agreed to.

Adjourned accordingly at Nineteen Minutes to Eleven o'clock.